I’m working on a business law question and need guidance to help me learn.
Please review the attached mediation fact pattern. Pretend you are the mediator and propose some basic settlement terms. 2-3 paragraphs will be sufficient.
Mediation Fact Pattern
The Contract and the Dispute
Aaron Flintstone is a young basketball player who has an endorsement deal with Coca-Cola. In his rookie year, he was one of the top scorers in the league. Aaron is extremely popular with young men, one of the company’s target markets. His jersey is a best seller and as his career progresses, it is expected that he will be offered many lucrative marketing deals.
Two years ago, Aaron and Coca-Cola signed a 10-year endorsement deal, with an option for an additional two years. Aaron made three public appearances for Coca-Cola and appeared in two television commercials for each of the past two years. Two new commercials are planned for this year, and they just finished filming the first one. So far, the marketing spots that feature Aaron have helped the company’s business. But now Coca-Cola and Aaron are having a dispute.
However, Aaron is known to have a bad temper and has been fined by the League twice in the past year for his temper. He has also been accused of regularly provoking bar fights. The contract between Aaron and Coca-Cola has a morals clause. That is where the dispute begins. The Company contends that Aaron’s actions, which include accusations of disorderly conduct, confirmed claims that he is a “deadbeat dad,” and excessive gambling, clearly demonstrate a breach of the morals clause. Aaron admits that he likes to party but says he did nothing wrong–he was legally gambling in Las Vegas and has not been convicted of any assaults.
The Coca-Cola Company’s contract with Aaron Flintstone includes:
1. MORALS CLAUSE: If Talent commits any act or makes a statement which brings Talent into public disrepute, contempt, scandal or ridicule or which shocks or offends the community, or which reflects unfavorably upon Company or reduces the commercial value of the Company’s association with Talent, then that will constitute a material breach of this Agreement, and Company may, at its option, immediately terminate the Talent Agreement.
3. PERSONAL APPEARANCES: In exchange for the payments listed below, Talent agrees to a maximum of 3 personal appearances per year, plus a maximum of 2 commercials per year, to be filmed at the option of the Company.
4. PAYMENT TERMS: In consideration for the agreements in the contract, Company will pay Talent $500,000 per year for the first two years, then $1.5 million per year in years 3-6 and $1.75 million per year in years 7-10.
5. EXCLUSIVITY: Talent agrees not to endorse, or contract with any other maker or distributor of any carbonated soft drinks, waters, sports drinks or alcoholic beverages of any kind during the term of this contract. Talent may endorse or contract with makers/distributors of dairy products and fruit juices during the term of this contract.
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