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EPISODE 6: CONTRACT BASICS 1.0
If you are a student-athlete (SA), or an involved parent/guardian/friend of same, whether collegiate or high school (in one of the many states where NIL is now permissible),there are two basic types of contracts you should become familiar with: (1) a player agent contract and (2) a contract for an NIL deal with a third-party brand/collective/individual. If you have (1) above, that person should help with (2), above! Nevertheless, one of the perks of NIL is the education gained by the SA; and contract awareness is important if not critical learning. In this article we will explain the basic “what” and “why”.
BASICS TO BOTH CONTRACT TYPES:
1. The Parties. Refers to the individuals/entities that intend to be bound by the Agreement. So, in (1) it would be the SA and the agent, and in (2) it would be, as example, the SA and X Shoes.
2. Services or Deliverables. A detailed description of what one of the “Parties” is providing to the other to avoid misunderstandings! This might include the preparation necessary, SKU numbers/identifiers, amounts, hours/frequency/timing/duration, follow-up, social platforms identified, geography, travel/expense, etc.
3. Exclusivity. Refers to whether the “Parties” work only with each other to the exclusion of others. As examples, one agent may preclude the SA from working or signing with other agents or one brand mayprohibit the SA from working at the same time for its competitor (X Shoes likely would not want the SA working also for Y Shoes). Be careful here!
4. Fees and Consideration. The SA rightfully expects to be paid something in return for their Services/Deliverables, as does the agent in (1). For the SA, this can be money, product (sometimes referred to as “in-kind”), or a combination of the two. The amount and payment triggers, and how payment issues to the SA are also important considerations. Being paid is known also as “monetization”.
5. Warranties, Covenants, and Representations. Each Party may make statements in the agreement specifically attributed to them, or they maybe mutual, regarding acceptable/prohibited conduct (do’s and don’ts),expectations, required conduct, and the quality and originality of the services/deliverables.
6. Confidentiality. Refers to the requirement that each party basically keep the non-public terms of the agreement a secret from any third-party or the public.
7. Intellectual Property (“IP”) means a work or invention that is the result of creativity to which one has rights (i.e. a trademark), etc. In NIL, this refers to the creative use of the SA’s name, image and likeness, and which has value. Keep in mind, however, IP also includes the creative output for brand benefit. So, for example, when the SA shoots a video or commercial endorsing a product, the “IP” rights in this creative original work may be reserved to the brand that paid.
8. Limitation of Liability (or “LOL” – not what you’re thinking) is where each or both Parties put a limit on how much they can lose if the contract goes sideways (a breach).
9. General Terms. Typically, this is the boilerplate legal mumbo jumbo on topics such as amending, assigning, governing law/venue (filing suit/applicable law), and contract interpretation. Be careful particularly with amendments that require a fully signed document and with venue/law that identifies the home state of the SA.
We will delve deeper into each contract type in future articles. We are here to help!
ABOUT THE AUTHORS:
NILegally Speaking™ is written by PowerNIL/Ken Feinberg, attorney, in collaboration with other expert attorneys focused on employment, labor, contract, and intellectual property law.
ken@powernil.com www.powernil.com