Kardashian Kontract Kerfuffle
The Kardashians are once again making headlines. This time, Hillair Capital Management, an investor in the Kardashian Beauty makeup brand, has sued Kim, Kourtney, and Khloe Kardashian for fraud, breach of contract, and disparagement, among other things. Hillair seeks to recover the $10 million it invested in an effort to rescue the beauty line. Additionally, Hillair seeks to recover its interest in the joint venture, which is allegedly valued at somewhere between $64 and $180 million. According to Hillair, “[t]he Kardashians’ support was, of course, absolutely essential to the success of the Kardashian-branded line and was a fundamental premise of the parties’ bargain.” Hillair asserts that the Kardashians were required to promote the brand on Twitter, Instagram, and Facebook to their more than 250 million followers. Hillair asserts that although the Kardashians were required to promote the brand on Twitter, Instagram, and Facebook to their more than 250 million followers, they refused to comply with their obligations and tried to find other investors in an effort to force Hillair out of the beauty business.
The Kardashians dispute the allegations, claiming that they have “suffered enormous damages as a result of the many failures and breaches created by the operator’s mismanagement of the company.”
The latest Kardashian dispute has just begun. But it is a good reminder to consider possible disputes regarding the promotion of a product at the time the contract is written. Here are a few things to keep in mind:
1. Specify the products to be promoted and, just as important, those that cannot be promoted
When writing a contract to use someone’s trademark, name, or reputation, it is critical to go beyond what products are included under the contract. Specify what is competition. Here, for example, could the Kardashians put their name on other beauty products? What about a skin-care line? Precise terms in the contract up front can limit the amount of fighting and potential litigation down the road.
2. Specify the types of promotion and any approval process
With social media, it is important to specify the number of tweets or posts, the type of comments that should be made, and who has final approval (if any) on the statements prior to being released. It is just as important, however, to provide any exclusions to the type of promotion.
So, for example, a contract should address statements made at public functions, even if that is not included in the promotion of the goods. Such provisions would prohibit public disparagement, such as Khloe Kardashian making a statement at a Dubai beauty world exhibit that she “hated everything about the Kardashian Beauty products and appearance.”
3. Anticipate problems
As with all contracts, it is best to anticipate problems and address them before entering into a business relationship. So, for example, in this case, the parties could have anticipated what would happen if the Kardashians decided to look for a different investor. Provisions to consider include the value of the agreement, liquidated damages, and injunctions and non-monetary relief.
A few carefully worded provisions in a contract can reduce the number of kerfuffles if the relationship breaks down.
Sources: http://www.usmagazine.com/celebrity-beauty/news/kardashians-sued-for-not-promoting-their-beauty-line-w200018 http://www.nydailynews.com/entertainment/gossip/kardashian-sisters-hit-180m-lawsuit-makeup-line-article-1.2573225
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