Discussion about the Bachelor Contract
December 8, 2003
There are 2 main objectives of the Bachelor contract: get desired performance and manage risk. There are other aspects, such as getting the proper intellectual property rights from the bachelorettes and the proper disclosure of lack of privacy, that also need to be accomplished, but we’ll defer those for other courses.
In addition, many other concerns about the identity of the candidate (to avoid skeletons in the closet) will be evaluated prior to the contract. While some of the candidate’s factual representations can be addressed, on a belt-and-suspenders basis, through representations and warranties, in practice the producers will take all appropriate steps to avoid forming a contract with a bachelorette who has issues. Thus, though the contract will reference these issues, they are properly considered and principally resolved prior to the contract.
Let me deal with the 2 principal objectives in turn.
Getting Desired Performance
In this context, there are really only 3 main remedies that we can use as tools to conform behavior: cash, injunctions/specific performance and termination (there are other remedies, but let’s keep it simple for now). Your choice is to wield these three remedies appropriately. That’s not so easy in this context or, for that matter, any entertainment context.
There are at least three obligations that need to be addressed: performance during taping, performance after taping is over, and confidentiality.
Regarding performance during taping, effectively 2 of the 3 main remedies are gone. Specific performance for personal services can’t be granted. A negative injunction against working for anyone else seems, at best, uninteresting.
More importantly, termination is a double-edged sword. If the bachelorette is totally into the dude, the threat of termination should be very powerful. On the other hand, the last thing the producers want to do is forcibly remove a bachelorette, especially if the audience or the bachelor resonate with her (good or bad). Therefore, the producers may create lots of bases to get rid of a bachelorette, but this remedy may be more painful to the producers than to the bachelorette. While the producers may be able to bluff that they will remove breaching bachelorettes, a bachelorette who calls their bluff would likely expose it.
So that leaves cash as the only real remedy. I don’t know exactly how much cash the producers pay the bachelorettes—Trista’s contract references $15,000 plus more money if she’s in the final four. So in theory the threat of taking away this money may conform her behavior enough. I don’t know about you, but $15,000 will motivate me!
Note that it is entirely unclear in Trista’s contract when the $15,000 is earned or paid. It would have been trivially easy to expressly condition this payment such that it is not earned at all until the end of the contract. The producers could argue that the words “in consideration of” make the continued compliance a condition, but is that how you read the language? Normally, if a contract says “in consideration of,” I interpret that language as a recital of consideration as one of the three elements of a valid contract. Shouldn’t the producers expressly use the word “condition” if that’s what they mean? At best, this is sloppy drafting. Of course, this reinforces my earlier point: DON’T ASSUME THE DRAFTERS KNOW MORE THAN YOU DO!!!!!
In addition to using the cash incentive, the producers can use damages as a threat. I would break the types of damages awards into two buckets: big and small. The producers will be reluctant to pursue small damages during the performance; doing so could spoil the mood. The producers might wait until after all obligations are performed and then seek the damages (see Loral v. Austin), but chances are that the producers will let small claims go because of the time/hassle of pursuing them. Large damages raise other issues (discussed below re. confidentiality).
Following taping, the producers will want the bachelorette to participate in media events, reunion shows, etc. Termination is no longer an option at all, and specific performance is still not available. Once again, that leaves cash as the main lever to pull. Once again, carrots rather than sticks seem far more likely to produce the desired actions.
That brings us to the big challenge: confidentiality. A big part of the show’s experience is dependent on uncertainty: who will the bachelor select each episode? Who will emerge from the pack? And, of course, what will happen at the end? Will he propose? Will she say yes?
Think about how many people know some information about the show’s developments. There’s all 25 bachelorettes, of course. There’s the film crew. There are all of the bachelorette’s friends, family, co-workers and social acquaintances. And finally, there’s the public at large who may spot one of the bachelorettes randomly. How can the producers keep everyone in the dark?
Draconian measures, like sequestering the bachelorettes from the beginning of production until airing of the final episode and cutting off all forms of communication (phone, email), would work, but are they really practical? I could easily see many bachelorettes backing out if told they have to put their life on hold for 7 or more months. That’s just too much to ask.
But letting the bachelorettes return to their normal life creates lots of opportunity for the secret to get out. The bachelorettes must keep quiet, presumably not even telling their family if they are engaged or using their family and friends as a support network if they are heartbroken. And their actions can’t betray them either; being seen in public with another person romantically will communicate too much. A contractual restriction on public dating could set up remedies, but will a court really enforce that ban?
Ignoring for the moment the many esoteric ways that information can leak out, let’s just deal with the most pointed problem: a woman selling her story for cash. Termination from the show is no longer an option, so we are left with two primary remedy choices: equitable relief and money.
In trade secret cases (something we discuss in more detail in the Intellectual Property survey class), traditionally equitable relief is considered the principal remedy. Indeed, courts can and do order publications not to publish stories containing misappropriated trade secrets. In this context, I think judges would be willing to grant those injunctions where they can.
But equitable relief should not be available if money damages will suffice. And where a party agrees to liquidated damages, they (by definition) have agreed that money damages will suffice. So the producers have to make a choice: do they want the ability to put gag orders or do they want liquidated damages.
The contract with Trista provides an uncomfortable solution: ask for both equitable relief and huge liquidated damages. I TRUST THAT BY NOW, YOU UNDERSTAND THAT THIS CHOICE MAY EVINCE A WEAKER UNDERSTANDING OF CONTRACT LAW THAN YOU HAVE TODAY. DO NOT BE FOOLED INTO THINKING THAT EVERYONE ELSE IS SMART AND YOU ARE THE LONE IDIOT IN THE WORLD. EVEN EXPENSIVE LAWYERS WITH DEGREES FROM FANCY SCHOOLS CAN MISS THE BOAT, ESPECIALLY WHEN THEY PROBABLY JUST STOLE THE DOCUMENT FROM THE INTERNET THEMSELVES.
So why would the producers take this approach? The huge liquidated damages amount ($5,000,000) certainly should act as a deterrent for breach, and so as a scare tactic, this may work. However, I am not a fan of contract provisions used solely to scare the other side without any meaningful remedy. I didn’t like the idea of unnecessarily scaring the people we wanted to develop a long-term relationship with, and I feared that too many scare provisions would push the contract closer towards the unconscionable zone.
In this situation, no matter what, the producer’s deterrent is incomplete. First, if a third party could find a way to make more than $5,000,000 from an early disclosure, it could facilitate an efficient breach. Second, bachelorettes may not be motivated by such huge numbers because it’s simply not comprehensible. Finally, the bachelorettes may be judgment-proof.
This latter point is essential to internalize. If the producers have chosen money damages over an injunction, but their ability to collect is limited because the bachelorettes lack the cash, then the producers may have boxed themselves into a worthless remedy.
I would take a different approach with the bachelorettes. Instead of liquidating damages and risking the inability to get injunctive relief, I would instead use a four-pronged remedies approach:
- First, I would lay the foundation for injunctive relief, using various self-serving statements, etc.
- Second, I would obligate the bachelorettes to disgorge any payments they receive for selling their story. The point here is to remove any financial incentive for the bachelorettes to cheat. This will not influence a bachelorette who makes disclosures “irrationally” (i.e., without a profit motive), but not many contract mechanism would affect those bachelorettes in any case.
- Third, I would retain the right to sue the bachelorettes for normal default expectation damages, including consequential damages. These may be subject to haircuts, such as through limits on speculative damages, but we may be able to shape this through contract. For example, consider if we contractually defined consequential damages to be broader than the defaults.
- Finally, I would create financial rewards for compliance. Imagine if we created a payoff if the final show airs without any disclosure having taken place. It may be worthwhile to create individual payouts plus potentially team-based payouts to try to create group pressure to conform. While the financial payouts from third parties trying to buy a story should dwarf the amount the producers pay out to buy silence, the bachelorettes may still value the producers’ payments because they may be less risky and still big enough numbers. Imagine a payout of $20,000 to each bachelorette payable if the final episode airs without squealing. This costs the producers a total of $500,000, which may or may not be financially do-able. From the bachelorette’s standpoint, $20,000 is probably a big enough number that they would really like to get that cash. (I know I would!) They may be even willing to forego dates and other ways of potential inadvertent disclosures if they understand that doing so risks the cash.
This four-part approach is far from perfect. There are still risks from irrational bachelorettes and from certain types of efficient breach. However, I think it may work better than just relying on liquidated damages or from the weird liquidated damages + equitable relief approach the producers actually took.
There is one other option: insurance. The problem with the remedies in this case may be that the bachelorettes can never give exactly what the producers want (protection of their economic interests). Perhaps the solution lies in outsourcing that risk to financially-solvent third parties (i.e., insurers). I don’t know if insurance is readily available for “conclusion-spoiling,” but if death of an actor is insurable (like we saw in the River Phoenix case), perhaps this risk is insurable as well.
A word about arbitration. Arbitration offers an opportunity to conduct proceedings in private, outside of any risk of public disclosure obligations. On that basis, arbitration is worth considering to avoid a litigious bachelorette from making confidential in-court disclosures. On the other hand, it is virtually impossible to get immediate injunctive relief in arbitration, and the producers may really want emergency judicial intervention if a rogue bachelorette is on the brink of disclosure. As a result, a blanket obligation to arbitrate disputes may be counterproductive to the producers’ interests.
Managing Risk
There are a lot of different services the producers supply to the bachelorettes. They supply transportation. They supply food. They supply a place to live (with a hot tub, of course). They supply all sorts of risky activities, like jet skiing, dog sled racing, etc. They provide clothes, make-up, hairstyling and manicures. And, of course, they supply the chance to meet a dude.
The proper way to draft this contract is to identify all of the substantive relationships the producers form with the bachelorettes and then include applicable provisions describing/limiting their obligations. For example, does the bachelorette contract constitute a real estate lease? This is not as easy a question as it might sound. If you think this might be a real estate lease, there are definitely provisions you would want to include to reflect that characterization of the relationship.
To minimize risk of liability for breach of contract or for torts, the producers would naturally use standard risk management tools: disclaimer of all warranties, waiver of consequential damages and dollar cap. In this context, it would also be prudent to try to get a release of all claims, like eBay did in its user agreement. The release is a heavier approach than the standard risk management provisions, but for this contract I think it’s warranted and essential.
While normally the release will work even without describing specifically what the bachelorettes are waiving, here I would go further and enumerate some of the specific risks that the bachelorettes are accepting, including:
- Risks of disappointed expectations. The show needs to be clear that there are no promises of dates, love, lust, sex or happiness. For the woman who the bachelor chooses, there also are no promises of marriage, long-term relationships, children or happiness.
- Risks of an unflattering portrayal. This includes both faithful depictions of unflattering behavior and bad portrayals due to editing. The risks include bruised feelings/mental instability and adverse treatment by others who watch the show (including loss of jobs, limited job prospects in the future, difficulty procuring future romantic partners and being shunned by family and friends).
- Risks of physical injury. Physical injuries could arise during transport, from doing risky physical activities, during events, on the set, and from other bachelorettes or the man himself. Should the producers try to provide medical assistance, this could create another situation for injury. Finally, there are other physical harms, such as STDs, that could happen due to the show.
- Risks of third party torts or crimes. The most obvious is unwanted sexual advances, but other bad behavior could be inflicted by the bachelor, the bachelorettes, the crew or the host.
This list is very incomplete, but the more contractual language about the situations the bachelorettes could experience, the easier it will be for the judge to believe that the bachelorette accepted the risk.
Two general observations. First, theoretically the producers should not need to waive liability for third party torts or crimes, as normally those actions will not be imputed back to the producers. However, the law is filled with doctrines that allow independent bad actions to be extrapolated to other parties, and the producers need to proceed accordingly,
Second, as you know from torts, assumption of risk agreements don’t always work. Certainly I would not expect that the release/waiver will immunize the producers for their intentional torts. For example, if the producers deliberately edited the show to defame a bachelorette, I doubt the contract would block the lawsuit. There is not a precise boundary for how much tort liability can be waived. If I were drafting, I would consult torts experts to get the state-of-the-art advice about how far we can go. For example, I would not be surprised if the tort lawyers required the initialing on every paragraph, a far more formalistic approach than most contracts use (…although notice that Trista didn’t initial).