Li Yifeng was detained for being involved in prostitution many times, and the former endorsement brands have announced the termination of cooperation. Can the brand party make a claim for this? How do I make a claim?
On September 11, @Ping An Beijing issued a police information circular: Recently, the Beijing police seized the actor Li Moumou (male, 35 years old) in the detection of a criminal case, who confessed to the illegal facts of repeated prostitution and has been administratively detained according to law. After verification by the CCTV reporter of the general station and the relevant departments, the actor Li Moumou is Li Yifeng.
After the police notice, a number of brands have announced the termination of their cooperative relationship with Li Yifeng, including Mengniu's Zhenguo Grain, Kyoto Nian Ci Ling, Haleon's brand Comfort, Which was spun off from GlaxoSmithKline, Luk Fook Jewelry, Duck and Duck Down Jacket, Kangbach, Wang Li Security (605268) and so on. Luxury brands such as Prada, HONMA Golf, Panerai and Rémy Martin also quickly issued statements terminating their partnership with Li Yifeng.
Some companies that have issued statements (Image source: Weibo)
The spokesperson "overturns", and the brand party has the right to terminate the contract and make a claim
What impact does the celebrity spokesperson's "overturning" and "loss of morality" and even illegal crimes have on the cooperative enterprises? How does the company terminate the contract and make a claim?
Ji Yufeng, a partner at Huiye Law Firm, said that the termination of the contract is divided into statutory rescission and agreed rescission, and if the rescission conditions stipulated in the contract are met, the brand party can rescind the contract. If the contract is not clear, it is necessary to judge whether the statutory conditions for rescission are met according to the purpose of the contract. The signing of an endorsement contract between the brand and the star is to use the social image and social evaluation of the star to increase its own commercial interests, in other words, the positive social image and social evaluation of the star are the basis for achieving the purpose of the contract. If the social image of the star turns negative, it will inevitably affect the commercial interests of the brand side and lead to the inability to achieve the purpose of the contract. In this case, the brand has the right to terminate the contract and require the artist to return the endorsement fee and compensate for the loss.
Li Yifeng attended Prada's brand activities
"As for how much the artist has to lose, the brand party should usually be compensated for all the losses caused by it, including the loss of expected benefits. In practice, considering that there is a certain degree of difficulty in calculating losses, many endorsement contracts will stipulate a specific amount of liquidated damages. If the artist believes that the agreed liquidated damages are excessively higher than the losses caused, the parties may request the people's court or arbitration institution to reduce them appropriately. Ji Yufeng said.
Pu Lei, a lawyer at Shanghai Qingdao Youcheng Law Firm, said that under normal circumstances, the amount of loss compensation is equivalent to the loss caused by the breach of contract, including the benefits that can be obtained after the performance of the contract, including the costs paid by the brand for the artist in the process of training, packaging, expansion, marketing and public relations for the artist, and the expected income that the brand party may obtain during the remaining period of the performance of the contract.
Can specific compensation clauses be written into the contract?
Although from a legal point of view, the brand party has the right to demand compensation for the corresponding losses of the artist who has lost morality, it is not common for enterprises to make claims against the artist through litigation channels.
The staff of the public relations department of a certain enterprise affected by the impact told the surging news reporter that in the contract agreement for cooperation with the star, a note is generally added: if the star causes image damage due to some reasons, affecting the brand, how to pay compensation. "Some companies will be very specific (payment conditions), but some companies may be a little simpler, such as the percentage of the cooperation target." The staff member said.
"But usually, even if a celebrity has such a thing, the company may not really claim and file a lawsuit." The company's staff admitted that many companies do not want to be involved in such negative public opinion in the first place, and once the company seeks litigation channels, it is often protracted.
"Most importantly, there are many stakeholders involved, and generally agencies (referring to star studios and other institutions) will usually give it (enterprises) the next time to talk about a different star, there may be some replacement in resources." The staff member said.
The surging news reporter learned from relevant enterprises that whether the star is in breach of contract depends on how the endorsement contract with the star is agreed. "Generally, enterprises will stipulate in the terms of the contract that if the star violates the law and is criminally punished, it is a breach of contract." The staff of the legal department of the enterprise said.
"You have to sign the top stream, the top stream likes international big names, the domestic product posture is low, and it should be inferior in terms of terms." The staff of the above-mentioned corporate public relations department admitted frankly. "Celebrities are generally more aggressive and do not accept compensation clauses in the contract, and companies can finally try to recover losses through lawsuits." The staff of the legal department of the enterprise said.
However, the relevant staff of an international luxury brand told the surging news that in general, the endorsement contract will involve the impact on the enterprise caused by the spokesperson's improper speech behavior, and the enterprise has the right to settle the claim or negotiate and communicate.
"However, the specific compensation clause should be difficult to write in the contract, otherwise people will not sign it." The luxury brand staff said that when companies cooperate with celebrities, they are "all bent on promoting cooperation".
The staff of the media department of a FMCG enterprise told the surging news reporter that the general contract signed will stipulate how to divide the responsibility after the occurrence of such adverse events, there are constraints on the stars, there are also constraints on the brand, and the specific compensation prices are agreed before signing the contract. Once the brand is negative, it also needs to pay the star, and the star will also pay the brand if it is negative, but generally the follow-up will resort to legal means to solve it.
Judging from the previous precedents, an enterprise's application for preservation measures against the property of a company related to a bad artist can often be supported by the court.
According to the China Judgment Documents Network, in 2021, an enterprise applied to the court to take preservation measures against the property valued at 17.75 million yuan applied for by an enterprise related to a bad artist surnamed Wu, and the application was approved by the relevant court. In the same year, another enterprise also applied to a municipal arbitration commission for property preservation of an enterprise related to a bad artist surnamed Wu. The relevant court ruled to freeze the company involved for more than 13.32 million yuan, and the freezing period was one year.
There is precedent for film and television investment companies to claim compensation from unscrupulous artists
In addition to the brand party that cooperates with the artist to endorse, can the investor of the film and television works in which the artist participates in the loss of morality also require the artist to compensate for the corresponding losses and liquidated damages or bear the corresponding losses?
According to public information, Li Yifeng was born in 1987 and is a Chinese mainland actor, pop singer, film and television producer. In 2007, Li Yifeng debuted through the draft, and has participated in film and television works such as "Ancient Sword Qitan", "Qingyunzhi", "Old Cannon", "Animal World" and so on.
As of press time, PLATFORMS SUCH AS QQ MUSIC, NETEASE CLOUD MUSIC, AND KUGOU MUSIC HAVE REMOVED LI Yifeng'S MUSIC WORKS. In terms of film and television, Li Yifeng's related works on iQiyi, Tencent Video, Youku and other platforms can still be seen, and Li Yifeng's related works can no longer be searched for by Mango TV and Migu Video.
It is understood that Li Yifeng has identified only one film to be broadcast, "Playground", after which it was said that he may participate in the movies "Black Gold Temptation", "Animal World 2" and the drama "Blade on the Clouds". At present, the cast and crew of the above works on various platforms have removed Li Yifeng.
Due to the long production cycle of film and television projects and the large total amount of investment, film and television companies that have shelved projects due to the loss of morality of relevant artists often bear greater risks and losses than consumer goods brands, and there is precedent for investors in film and television works to demand compensation for corresponding losses by artists who have lost morality.
Actor Gao Yunxiang broke the "sexual assault scandal" in 2018, and although he was later found not guilty by the local court, Zhejiang Tangde Film and Television Co., Ltd. (300426. SZ, Tangde Film and Television) said in its reply to the Shenzhen Stock Exchange's inquiry letter announcement on May 5, 2022, that "Aranya Romance" has not been released due to the negative events of the main actor Gao Yunxiang, and the company has changed the male and female lead actors for modification and production.
Tangde Film and Television filed a lawsuit against Gao Yunxiang in 2018. On the evening of January 16, 2022, Tangde Film and Television announced that it had received a first-instance judgment, which showed that Gao Yunxiang needed to compensate Tangde Film and Television for losses of 48.85 million yuan and interest losses, and pay liquidated damages of 150,000 yuan and lawyers' fees of 420,000 yuan. Beijing Yixuan Cultural Brokerage Co., Ltd. bears joint and several liability for this.
Tangde Film and Television said in the announcement that the case is still in the second-instance trial, the company expects to win the case is more likely, if the company wins the lawsuit and receives the case execution payment, the future issuance of the project can cover the cost after deducting the case execution payment, the possibility of project loss is small, so the project does not need to make an impairment provision.