Fearful of having to pull ads if war with Iraq breaks out, the US financial services giant is looking for contractual escape routes.
Topic: Contract
Who: American Express Co, Digitas, WPP Group’s Olgilvy & Mather Worldwide and Mindshare
When: January 2003
Where: New York
What happened:
Having been severely hit by 9/11 after suffering an office relocation from its previous HQ next to the World Trade Center, followed by a further blow to its operations as a result of the post 9/11 decline in travel, American Express Co is taking no chances this time round. With Iraq in mind, it has issued letters to its media buying agencies requiring them to let American Express out of its contracts with them if war is declared. In response, some US commentators have suggested that this is a bit over the top. They feel that if war with Iraq is “go”, those involved in the advertising process will not need contracts to exercise sensitivity and flexibility where, for example, it is felt that particular advertising needs to be shifted around or postponed. American Express says that it is simply a matter of “common sense planning ahead”.
Why this matters:
Here in the UK, as well as in the US, the normal contractual “fix” for situations like this is the “force majeure” clause. Such a clause appears, for example, in the current suggested IPA/CIPS ISBA Media Services contract between an advertiser and its media buying agency. Sometimes such clauses give an illustrative list of the sort of events the clause will apply to, for instance, “including act of god, war, civil commotion, fire, flood, explosion or act of terrorism”. The clause will go on to provide that if either party is prevented from performing its obligations under the contract as a direct result of events of this kind, then no liability for breach shall arise. It is also often provided that if the circumstances in question continue to apply beyond a stipulated period of time, this is a permissible basis for regarding the contract as at an end. A slightly different approach to this kind of clause is simply to refer generically to events over which a contracting party has no control without giving any examples. In both cases, however, the question arises as to whether such a provision would apply to the sort of circumstances envisaged by American Express.
For instance, if the printing plant that is publishing the issue of Vogue magazine which was due to carry the American Express advert in question is destroyed by a rocket attack, it is unlikely anybody would argue against this being a force majeure event. If on the other hand, because of heightened sensitivities following the outbreak of war with Iraq, it is felt by American Express that it would not necessarily serve their cause or their brand to advertise using particular images, is this strictly a “force majeure” situation?
UK agencies and media owners may want to review their standard contracts in the light of this development, but in most cases it is to be hoped that even without such provisions in the relevant contract, all those concerned will demonstrate understanding and restraint.
