What is a Condition Subsequent and a Morals Clause?

The other day, I posted a blog topic revolving around the term of an agreement called a condition precedent. Today, I will be describing what is called a condition subsequent. Similar to a condition precedent, a condition subsequent is a term within an agreement. A condition subsequent is an uncertain event which occurs, and as a realist brings the promisor’s liability to an end. It is an out written within a contract. 

To further describe what a condition subsequent is, I will provide an example learned in class:

You agree to do some consulting for the World Hockey Association. You have set up a four stage program which will open within the next year. You agreed that each stage of the program is to be approved by the CEO of the World Hockey Association, and if the CEO does not approve your work, they are not required to pay you for that stage. Further work under your contract with the World Hockey Association also ceases as a result. The condition subsequent, or the “out” clause written in this agreement is the CEO must approve each stage of the program. If they do not, they have the right to terminate the deal and not pay you. 

Below is another example of a condition subsequent which I came across recently as a hockey fan when I went to a Hamilton Bulldogs game back in February. You can read the condition subsequent on the back of the ticket I purchased and scanned: 

You will probably find clauses and fine print similar to this on the back of many tickets you purchase for the events you attend. The second sentence in the fine print states management could have refused my admission or expelled me from the facility if my presence was deemed unpleasant. The fine print further states I would not have been able to refund my ticket had I been expelled. There were many rules laid I was to obey, and breaking any of those rules would have led to me getting expelled. The rules laid out for me to obey were the condition subsequent within the contract. If I broke any of these rules, I would have terminated my right to watch the Bulldogs and would have been removed from the facility. These rules laid out were the Bulldogs’ and The First Ontario Centre’s out clause which allowed them to kick out misbehaving spectators. 

A morals clause could be considered a condition subsequent. A morals clause essentially prohibits immoral, illegal, or unacceptable behaviour from an athlete. They are common within a player’s contract with their team, and with a player and their sponsors. If a player acts against their morals clause, their team or sponsor can terminate their deal. Recent real life examples of players breaking their morals clause could be Ray Rice committing domestic violence, or Tiger Woods committing adultery and Gillette cutting ties with him as a result. We learned in class a team or a sponsor will want the moral clause to be really broad in order to make more possible out clauses for them to terminate the deal. On the other hand, we learned athletes want the moral clause to be more narrow. That way, there is less of a reason to have their contract with a team or a sponsor suspended or terminated. 

Sponsors who are signing athletes with a history of immoral behaviour will create out clauses within their contract focusing around the past problems the athlete was associated with. For example, sponsors wanting John Daly to endorse their brand would want to create an out clause within the contract stating if he were to be caught drinking or gambling, their deal would be terminated. Sponsors wanting Ray Rice or Tiger Woods to endorse their products may want to create moral clauses within their contract stating they should respect their wives, and to be faithful. 

Morals clauses will continue to be brought up in the world of sport. The National Football League encountered major problems when they only suspended Ray Rice for only two games. Since then, they have changed their policy and are now coming down harder on issues such as domestic violence. As more instances like the Ray Rice scenario occur, morals clauses will continue to be developed.