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This article is written by Hitanshi Khandelwal pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.

Introduction

A celebrity endorsement agreement and an artist agreement are very similar to each other. Both involve a person who is a celebrity, who is well known in his field, or an artist who is also very proficient in his field. They both charge compensation for the role performed by them. The main difference between them is that in a celebrity endorsement agreement, the brand uses celebrity’s fame to reach more potential customers and in an artist agreement, the artists come into an agreement with the production houses for a particular movie or an event. We have discussed both these agreements in brief in this article.

Understanding a celebrity endorsement agreement

A celebrity endorsement agreement is an agreement that is made between a celebrity who is well known in his field and a company or an organisation who wishes to promote their company or products through the celebrity’s good name. In exchange for the celebrity’s popularity and goodwill, the celebrity charges compensation or a fee from the company which is an online education This endorsement can take place through the celebrity’s performance in an advertisement or just by wearing the brand’s (company) product. For example, Shah Rukh Khan promotes a brand named ‘Byjus’ which is an online education application, by endorsing their services. 

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A celebrity endorsement agreement contains

  1. An introduction of the parties. It includes, what services are the company engaged in, in what field the celebrity is renowned.
  2. The terms and conditions of the agreement as to how the celebrity would promote the company’s products or services, the date and locations for a workday, the compensation which is to be received by them from the company. It also states the payment procedure which is to be followed.
  3. It would explain the duties and responsibilities of the celebrity while promoting the product. It includes not engaging in any activities which might harm the reputation of the organisation or not participating in activities and events of the organisation’s competitors.
  4. It includes exclusivity where the artist is restricted to work with any similar project unless there is prior consent of the other party.
  5. It also includes a force majeure clause where either party can terminate the agreement in case there is any unavoidable or unexpected event.
  6. It includes a confidentiality clause, wherein the celebrity or the company shall under any circumstances keep the matters confidential before and after the termination of the agreement.

This type of agreement is used as a marketing technique by various brands like Cello, Maaza, ITC, Pepsi, Thumbs up, Dove, and so on. They use the fame and goodwill of the celebrities to reach out to their prospective buyers. 

Benefits of a celebrity endorsement agreement

There are some benefits of these endorsements such as:

  1. There is an opportunity to make a new market and more prospective buyers for the products
  2. There is a chance of spiked-up sales of the product.

Celebrity endorsement misleading the audience

There are few instances where celebrity endorsements mislead the audiences which will be discussed below:

  • Indian Institute of Planning and Management (IIPM)

There were five students who paid somewhere between Rs 4.50 lakh and Rs 11 lakh to enroll in the ‘IIPM School of Business and Economy (ISBE)’ blamed Bollywood superstar Shah Rukh Khan for their misfortunes in 2013. The course turned out to be a correspondence course that was also unrecognised. Shah Rukh Khan was mysteriously absent from the ads shortly after the students filed a petition in the High Court.

  • Home trade scam of 2002 

The business was backed by three big names: Sachin Tendulkar, Hrithik Roshan, and Shah Rukh Khan. The business sucked up thousands of crores of investor money without making a single product, and the celebrity-endorsed brand building was a critical part of their operation.

  • Amitabh Bachan in Parle’s ‘Kacha Mango Bite’

Amitabh Bachchan got into trouble in 2013 when he was seen pelting stones at a mango tree in an advertisement for a candy brand. The Advertising Standards Council of India was irritated by this. They issued a statement claiming that children would mimic Amitabh Bachchan’s behaviour in the advertisement, potentially injuring them. Later, the commercial was taken off the air.

  • Chastised for promoting a skin-lightening cream

The actor was chastised for promoting a skin-lightening cream. The star and the company were encouraged to avoid marketing fairness creams in an online campaign called “Dark and Beautiful.” Many actors, including Aamir Khan, later came out in support of the serious cause and pledged to never sell such items again. SRK, on the other hand, did not take this path.

Consumer Rights under the celebrity endorsement

After the Maggi controversy which took place in 2015, Maggi was banned nationwide and many complaints were filed by people against celebrities endorsing Maggi. The Government decided to introduce new statutes under consumer rights. In the new bill, the government decided to make the celebrities liable for their endorsements.

In the present scenario, a celebrity can be held liable if he endorses products that mislead the interest of consumers, under the Food Safety and Standards Act, 2006, the Indian Penal Code (IPC),1860, and the Consumer Protection Act,1986. 

The celebrity will be liable to pay a maximum fine of Rs 100,000 and imprisonment of up to two years. If similar offences are committed by the celebrity, then the fine can be increased to a maximum of Rs. 500,000 and imprisonment of up to 5 years.

What is an artist agreement

An artist agreement is like any other agreement where two parties an artist who basically is an actor, a singer, or an owner of an artwork and the person who is basically hiring them. In our day-to-day lives, we see many celebrities like actors, singers, etc. enter into an agreement with the production houses. The agreement which they sign with the production houses is their artist agreement. These agreements ensure that the event or movie they signed up for runs smoothly. This agreement explains:

  1. An introduction of the parties. It includes, what services are the company engaged in, in what field the artist is renowned.
  2. The terms and conditions of this agreement would include the duties and responsibilities of the parties to this agreement. It includes points such as how the celebrity would promote the company’s products or services, the date and locations for a workday, the compensation which is to be received by them from the company. It also states the payment procedure which is to be followed.
  3. It would explain the duties and responsibilities of the artist who is performing for the production house. It includes not engaging in any activities which might harm the reputation of the production house or not participating in activities and events of the production house’s competitors.
  4. It includes exclusivity where the artist is restricted to work with any similar project unless there is prior consent of the other party.
  5. An indemnity clause is also included in the agreement wherein the production house gets indemnified by the artist if due to any reason the production house suffers any loss due to the artist’s action.
  6. It includes a confidentiality clause, wherein the artist or the production house shall under any circumstances keep the matters confidential before and after the termination of the agreement.

There are many other clauses that can be added to this agreement if the parties feel so. They can alter or add the clauses in the agreements as per their wants and preferences.

These types of agreements are like any other agreement. They both require two parties and for proper functioning, they shall be in writing. The tasks and obligations to be performed, duration of the agreement, compensation that the performing party has to receive, and other related clauses are put into this type of agreement. The agreements are usually signed before the artist has to perform anything.

Significant case laws

Svf Entertainment Pvt. Ltd vs. Mr. Anupriyo Sengupta

In this case, the plaintiff could be successful in establishing a prima facie case that the negative covenant found in clause 2A of the said agreement, which is still in effect, is lawful within the term of the said agreement. However, in terms of the other two provisions for an interlocutory injunction, namely, the balance of convenience and irreparable harm, I find that under the said agreement, the plaintiff is not expected to do something to enhance the respondent’s ability as an artist. In exchange for the respondent’s participation in any film made by the applicant, the latter must pay only the respondent’s remuneration at the agreed rate at the time of the film’s release. 

The petitioner’s claim that it is only making films with the respondent and no other artists may not be true. In a letter dated December 28, 2017, cited by the petitioner in its supplementary affidavit, the respondent stated that the petitioner had previously posed no objection to him working on films with M/s Surinder Films and M/s Heartbeat Productions without first obtaining its approval. The respondent has not refuted the evidence in its supplementary affidavit. Also, in its December 12, 2017 notice to the respondent, the petitioner said that if the respondent does not resolve the violation of the negative covenant, it will seek all available remedies, including suing him for damages. The complainant makes no claim that the respondent lacks the financial means to pay the damages, if any, levied against him in the arbitral proceeding. In light of these circumstances, I do not believe that the balance of convenience favours the petitioner or that the petitioner would suffer irreparable harm if its request for an injunction under Section 9 of the Act of 1996 is denied.

Shanti Films Corporation (supra) Dispute

The dispute in Shanti Films Corporation (supra) involved the Gramophone Company and the filmmaker. The arrangement was not for a set period of time and could be ended at the plaintiff’s discretion. The agreement also does not state that if the plaintiff fails to pay the royalty, all rights granted to the plaintiff will revert to the defendant no. 1. clause 3(A) of the agreement in the above matter states that defendant no.1 hereby assigns and transfers, and agrees to grant and pass to the plaintiff completely and beneficially for the world, the copyright for making records for all contract works made available to the plaintiff under the terms of this agreement, as well as the copyright for making records for all contract works made available to the plaintiff under the terms of this agreement, performing right and all other rights, title, and interest in the literary, dramatic, and musical works embodied in the said films, including all rights of publication, sound and television broadcasting, public performance, and mechanical reproduction of the said works, as well as the exclusive and exclusive right to make or authorise the making of any record embodying the contract recordings, whether alone or in combination with other recordings. The provisions in the agreements under consideration vary from those in Shanti Film (supra), and all of the agreements are for a set period of time, with similar clauses about recording from film soundtracks after the period has expired.

Conclusion

A celebrity’s endorsement agreement, in brief, is an agreement wherein a celebrity endorses or promotes a brand’s product or services. There are many cases where the celebrity’s endorsement went wrong and the celebrities had to bear the criticisms and consequences.

Whereas, an artist agreement is a legal document that an organisation gives to a performer. The agreement indicates the artist’s legal attachment to a specific agency, which normally binds them to do specific creative projects for that agency, depending on the form of agreement. 

References

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