This is a rejoinder to the article, “Restraint of Trade and Artistic Freedom in Nigeria” by Rotimi Fawole, published in Premium Times on 15 February 2016. Fawole’smain argument is that musicians engaged as Brand Ambassadors by telecommunication companies in Nigeria are precluded from working with ambassadors of rival brands on projects that are not in competition. He argues that this is the case even when the brand one ambassador is contracted to promote has no connection with another ambassador’s brand. This, according to him, is an instance of the doctrine of restraint of trade.
I am in agreement with Fawole’sview that the common law doctrine of restraint of trade enjoins a person to carry out legitimate trade in any way or manner he chooses. This contractual theory is anchored on the consent and freewill of the parties involved. Thus, any restraint of a person’s right to work is prima facie void. The presumption will be rebutted if the restraint is reasonable with particular reference to the interest of the parties concerned and of the public.
The 1894 English House of the Lords decision in Nordenfelt v Nordenfelt was to the effect that even though general restraint is prima facie void, a restraint may nonetheless be legitimate provided that the party alleging its validity can prove it to be reasonable and in the public interest. The mechanism the court uses to determine whether a restriction is an unenforceable restraint of trade was set out in this case and it known as the ‘Nordenfelt test’. Initially, the body of law under the doctrine of restraint of trade was developed and made applicable to “solus agreement”only but the 1968 House of the Lords decision in Esso Petroleum Co Ltd v Harper’s Garrage(Stourport)Ltd extended the legal frontiers to include musical agreements. Solus agreement refers to those contracts that a party is duty bound to buy his supplies from a single source.
The applicability of the doctrine of restraints of trade in musical contracts was done not to protect the weak or vulnerable from transactions the law considers unfair. That can be taken care under the sphere of doctrine of undue influence. The distinction between undue influence and the doctrine of restraints of trade is blurry, no doubt. Both doctrines are aimed at protecting the interest of artists who enter into restrictive contracts when in a disadvantaged position or with poor bargaining power. That is to say that inequality in the bargaining process is an undercurrent in many of the decisions on restraints of trade relating to the music industry.
The word inequality as used here goes beyond the lexical denotation. H. Beale in his article entitled “Inequality of Bargaining Power” published in the Oxford Journal of Legal Studies(1986,volume 6, number 1,page 123) arguably defines it to be “ignorance,vulnerability to persuasion, desperate need, lack of bargaining skill or simple lack of influence in the market place.” It is the combination of these factors coupled with sale at an under price and lack of proper advice that have compelled the courts to intervene in the process of how such agreements were made, rather than the particular objectives of musical contracts.
This body of law that has evolved for more than forty years is a product of judicial activism developed by the English judges to ameliorate the harshness of the standard form of contracts as a way of protecting the notion of public interest and the right to unfettered trade.This has given birth to the twin test of reasonableness between the parties, on the one hand, and with regard to the public, on the other. The courts in this wise are less concerned with the creativity and integrity of the artists than with the relative bargaining position of the parties in such contracts, which is the primary factor in considering the fairness of the contractual process.
In all the cases in which the doctrine of restraint of trade is invoked, there seems to always be one factor common to them. The courts are usually perturbed about the restriction of an individual’s right to free trade. In determining this, the court normally focuses on two issues: whether the restrictions go further than providing adequate protection for the legitimate interests of the party in whose favour they are granted (that is the managers, publishers or record company), and whether they can be justified as being in the best interest of the party restrained (that is the artist). Where the restriction is deemed reasonable in the eyes of the law, the courts will not void the contract.This is the common thread that runs from the Schroeder case to the George Michael case as regards the terms and bargaining processes of the respective contracts.While remuneration or other consideration might be different, the basic principles are similar. The key elements are exclusivity, duration, territory, ownership of the material and the right to terminate and assign.
Against this background, can we say that Nigerian brand ambassador contracts are within the doctrine of restraint of trade? According to the Wikipedia, the free encyclopedia,’ a brand ambassador isa person who is hired by an organization or company to represent a brand in a positive light and, by doing so, help to increase brand awareness and sales. The brandambassador is meant to embody the corporate identity of the hiring organization in appearance, demeanor, values and ethics.
Contracts or an agreement for brand ambassadorship in Nigeria come mostly in standard form. Standard form of contracts in the sense that has been sharpens by legal challenges, technological and marketing development. The standard form contracts are those contracts that reflect the longstanding industry practice.
The exclusivity clause that forbids a particular brand ambassador in the telecommunications industry from having anything to do with a rival brand ambassador is no doubt a violation of freedom of association and a partial restraint. Every case depends on its own facts and circumstances.In common law, any restraint whether partial or general is void but if the restraint is reasonable as between the parties and satisfies the public interest test then it is legal. What the court will be concerned about is whether the consideration or remuneration for the brand ambassador is fair and commensurate. And if it is fair and commensurate then such an agreement is enforceable. The key point is not whether the artist has been restrained from plying his trade or business but whether both parties in the agreement are mutually committed to each other. It becomes unfair when one of the parties,usually the artist, is bound exclusively to a party who is not similarly bound.
The P Square musical group is brand ambassador of Globacom and one of the highest paid brand ambassadors in Nigeria. While Peter got a brand new 2015 Mercedes Benz G-Wagon, Paul was given a brand new 2015 Range Rover Vogue. The two luxury SUVs cost over N25million each, according to market prices.Besides, according to the Leadership Newspaper of 29 August 2015, the deal also attracted a huge cash payment ofN140 million.
If the covenant of not “having anything to do with rival brands” was included in their contract with Globacom, we cannot not say that they were thereby prevented from plying their trade. Although, it would have an element of partial restraint, the focus of the court as suggested by the judicial precedents would be whether the consideration or remuneration for the partial restraint is fair and commensurate in the eyes of the parties and in the public interest. I think the consideration for the restraint using the P Square group as example is fair and commensurate both to the parties and do not offend public policy.
Public policy demands that every person shall be at liberty to work for himself, and shall not be at liberty to deny himself or the state of his labour, skill, or talent by any agreement that he enters into. In another breath, it also requires that when a man has by skill or by any other means gotten something which he wants to sell, he should be at liberty to sell it in the most advantageous way in the market; and in order to enable him sell it advantageously in the market it is necessary that he should be able to preclude himself from entering into competition with the purchaser.
The 1974 English House of the Lords decision in Schroeder Music Publishing Company Limited V Macaulay is quite illustrative and helps to understand when an artist can be said to have been denied the right to ply his trade in the real sense. This case was the first musical contract in which the doctrine was applied.It involved a young and unknown song writer by name Macaulay who entered into an agreement for exclusive services with a publishing company for five years. The song writer assigned to the publisher full and universal copyrightin each of the original songs created at any time during the agreement. The publisher paid 50 pounds as a general advance against royalties and when the first 50 pounds was recouped from royalties they would advance a further 50 pounds to be recouped again from royalties. The advances were to continue throughout the initial five year period and could be extended if the total royalties advanced equaled or exceeded 50 pounds. The publisher could terminate the agreement with just one month written notice but the songwriter could not terminate the agreement. Besides, the publisher was under no obligation to publish any of the songs and the songwriter could earn nothing if the works were not published.
Expectedly, the court voided the agreement on the ground of it been unfair and against public policy. The position of the court was that the restriction was not fair and reasonable, in that there was no obligation on the part of publisher whereas the songwriter was totally committed.
In the light of the Macaulay case, it would not be out of place to argue that the Nigerian telecommunicationscompanies’ standard form brand ambassador contracts do not fall into the class of general, but partial, restraint. And the legal position that has evolved over time is that where the restraint is fair and reasonable in the eyes of the parties and do not offend public policy then the contract can be enforced.