In Baton Rouge, Louisiana, parties enter into contracts for various reasons. Contracts are entered into for the sale of goods and for the lease or purchase of land. In Hollywood, a common contract entered into is the endorsement contract. Regardless of the kind of contract created, with all contracts, violation of the contract terms can result in financial injury to the breaching party.
On Dec. 10, apparel-maker, Oakley, filed a lawsuit against famed golfer Rory McIlroy and Nike alleging breach of contract. McIlroy and Oakley previously entered into a contract for McIlroy to endorse the company’s eyewear and performance apparel. The contract also included a right of first refusal clause, which would allow Oakley to match any other offers McIlroy received for his endorsement of glasses and clothing. When McIlroy received Nike’s offer, Oakley supposedly exercised its right of first refusal matching the Nike offer, but McIlroy ignored the counteroffer.
Oakley alleges that McIlroy breached its contract with Oakley by ignoring its right of first refusal and signing to a deal with Nike. McIlroy claims that an email Oakley sent to McIlroy’s agent, which said ‘no contract for 2013,’ effectively waived Oakley’s contract right to renew. McIlroy and his agents, however, continued to bargain with Oakley after the email was sent. The parties’ contract, which is set to expire on December 31st of this year, would continue into 2013 if Oakley matched Nike’s offer.
Violation of the terms of a contract can result in substantial financial injury to the breaching party. Here, Oakley is seeking damages and an injunction for McIlroy’s breach. If the court finds that McIlroy breached its contract with Oakley, not only will McIlroy have to pay damages, but he will also be prohibited from entering into the contract with Nike.
Source: ESPN, “Oakley: Mcllroy, Nike breached deal,” Lester Munson, Dec. 14, 2012