Often business contracts in New Jersey are complex documents with many nuanced clauses. In order for a contract to be upheld, each party to the contract must agree to and fulfill the terms of the contract. When a term of the contract is either not fulfilled by a party or is ignored by a party, then it is likely that a breach of contract has occurred. When a breach occurs, the breaching party often owes damages to the non-breaching party. However, in many cases, there is a dispute as to whether a breach occurred at all and what the damages are.
Recently, the sports apparel company Oakley has sued professional golfer Rory McIlroy over a supposed breach of contract. According to Oakley, it has an apparel contract with McIlroy that includes a right of first refusal, which would allow the company to match any other company’s deal with McIlroy. According to the suit, Oakley has tried to use its right of first refusal to keep McIlroy from signing a rumored $200 million deal with Nike. However, according to Oakley, McIlroy ignored its request and therefore breached the contract.
McIlroy is currently the No. 1-ranked professional golfer, and Oakley claims to have suffered “irreparable” damage from the breach. Additionally, the company claims that it recently spent $300,000 on a photo shoot highlighting the products McIlroy would be wearing next year. Oakley is asking the court for an injunction to stop the deal between Nike and McIlroy.
Like in this dispute, many times parties disagree about the terms of a contract. When terms are not clearly written or negotiated, parties can have different ideas about what is expected of them. In order to avoid these types of disputes, New Jersey businesses should ensure that their contracts are expertly negotiated and clearly written.
Source: Yahoo Sports, “Report: Oakley sues Rory McIlroy and Nike over breach of contract,” Jonathan Wall, Dec. 17, 2012