A Quick Look at the Use, Potential Use, and Limits of Tolling and Force Majeure Provisions in Promotional Agreements/Relationships During the Battle Against COVID-19
Boxing fans, never mind the boxers themselves, may be receiving a jolt of energy as the sport is starting to take steps around the world, and notably on ESPN this past month, to resume following the ascent of the COVID-19 pandemic and the public safety precautions initiated as a result of same. It is important to note, however, that there are currently only a few promoters worldwide who are either staging cards, talking about staging cards, and/or have the financial resources to stage cards involving no audiences and a “bubble” in which all necessary participants can reside and be monitored prior to fight night. The logical question some may thus ask is what happens to the minimum bouts requirements typically contained in promotional agreements and how a boxer can expect to get the most out of their promoter during this unprecedented time. Answers can be found in the form of tolling provisions and force majeure clauses. A quick look on their use, potential use, and potential limits follows.
What is a Tolling Provision?
A tolling provision in a contract is a provision that, if its conditions are met, suspends or interrupts the term of an agreement. In boxing, a typical tolling provision allows a promoter to extend the term of their agreement with a boxer in the event of a postponement of a given fight, or in the event that the boxer becomes injured, suspended, or permanently/ partially disabled. While not as typical, a tolling provision could be crafted such that a promotional agreement is tolled in the event of an extraordinary event or circumstance that is beyond the control of the parties, also known as a “force majeure,” which, as will be discussed below, is more frequently a standalone clause in a given agreement.
What is a Force Majeure Clause?
Generally speaking, a force majeure clause is a clause in an agreement whereby either one, or all of, the parties would be freed from liability/further responsibility to the other in the event of an “act of G-d,” or, as noted above, an extraordinary event or circumstance that is beyond the control of the parties. A typical force majeure clause may invoke a pandemic, a war, a strike, or some such similar prospective occurrence. The clause typically does not excuse a party’s wholesale non-performance, but rather suspends the performance of a given contractual obligation during the period of such an extraordinary event or circumstance. In promotional agreements, a force majeure clause is typically separate from a tolling provision of the nature detailed above, though its effect would be substantially similar.
Potential Impact of Tolling Provisions and Force Majeure Clauses on Promotional Agreements/Relationships
I was recently carbon copied on a letter from a well-known U.S. boxing promoter to one of its boxers. Within the letter, the promoter stated that as a result of the COVID-19 pandemic and its accompanying inability to promote boxing events in most U.S. jurisdictions as a result of same, the promoter was employing the force majeure clause within its promotional agreement with the boxer and indefinitely tolling the agreement. The time remaining on the agreement will thus stop running until whenever it is that professional boxing will be able to safely and regularly resume.
While the above-referenced promoter had the foresight to include a force majeure clause in its agreement, and was thus able to have its inability to perform excused by invoking the same, others may only have a tolling provision which, as summarized above, turns only on the actions/inaction or physical condition of the boxer, and not any action by the manager, promoter, or outside forces. In a situation where there is only a tolling provision like the one described, a promoter may instead have to seek a separate agreement with a boxer, such as an addendum or amendment to any existing promotional agreement, to address the tolling of their prior agreements during the pandemic. In the alternative, in the event that a boxer were to seek legal action against his/her promoter for failing to provide the minimum amount of contractually agreed-to bouts for this year despite the pandemic, a defense known as “frustration of purpose” would likely be employed whereby it would essentially have to be asserted that the very purpose of a given promotional agreement, that is for the boxer to compete in a certain number of bouts per year, was so frustrated by the COVID-19 pandemic that the promoter should not be held liable for any alleged breach.
A Potential Limit on the Use of Tolling Provisions and Force Majeure Clauses in Boxing?
An open question based on the recent activity of promoters such as Top Rank in boxing, and the UFC in mixed martial arts, is how long most promoters could reasonably be excused from performance of their contractual obligations to provide boxers with bouts and bout opportunities. Top Rank’s Las Vegas bubble and the UFC’s “Fight Island” have demonstrated, notwithstanding a handful of setbacks per COVID-19 positive participants, that boxing can be staged right now with the appropriate safeguards and when a promoter actually has the budget to set up and maintain facilities such as those being utilized by the aforementioned entities. While it is typical for a promoter to have to demonstrate its liquidity/finances in order to obtain its license from an athletic commission so that a commission can be comfortable that all payments can and will be made in connection with their promotions, asking any given promoter, especially those without a television or streaming deal, to be financially able to set up their own multi-week, CDC guidelines-compliant bubble is a far different issue. At the end of the day, the boxers, their management, and their advisors have to understand, and likely do, that we are living through a pandemic of the likes that has not been seen in a very long time and that the ability to get boxing promotions going again at full blast is, with just a few exceptions, in lockstep with the measured reopening of the rest of the economy.
• It should also be noted that grievances arising from the requisite number of bouts per year may also arise in the context of boxer’s management or advisory agreements. A manager or advisor, however, would be able to invoke many of the same contractual provisions or defenses that are discussed above. Indeed, with the exception of perhaps the PBC, few managers or advisors would likely be able to singlehandedly set up a COVID-19 compliant fight card.
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Please do not hesitate to contact the Law Offices of Paul S. Haberman LLC with questions on any legal, regulatory, or contractual issues that you may encounter in the combat sports world.