30th July 2021
Last night Channel 4 news revealed that the science museum in London had agreed to a ‘gagging’ – or non-disparagement – clause in a sponsorship agreement with Shell.
Exclusive: The Science Museum has signed a gagging clause in its agreement with Shell International to sponsor its climate change exhibition, agreeing to take care not to say anything that could damage the company’s reputation, Channel 4 News has learnt.
— Channel 4 News (@Channel4News) July 29, 2021
This revelation has been a reputational disaster for both parties.
Here is Greta Thunburg:
The “Science” Museum just killed irony (and their own reputation). https://t.co/95OB7tjI1J
— Greta Thunberg (@GretaThunberg) July 29, 2021
In my view, both parties deserve this flak – as it was an unwise provision to have in such an agreement.
They only have themselves to blame.
One difference between a good contract lawyer and a wise contract lawyer is to know the difference between a provision being available for an agreement and a provision being appropriate for such an agreement.
The agreement here was a sponsorship agreement – and in the normal course of things, and as between private commercial parties, such a non-disparagement clause would be unexceptional.
Such a clause does two things.
First, it expressly regulates what a party can and cannot do.
Second, it provides an express basis for terminating a contract (or for some other legal remedy) if the provision is breached.
In this particular case, Shell could well have ‘taken a view’ – to use a common commercial lawyers’ phrase – on the risk of whether the science museum would disparage Shell.
And if so, whether Shell would really want to rely on such an express provision in ending the sponsorship agreement.
Yes: there was a risk of disparagement – but did it really need to be dealt with on the face of the agreement?
Or was it a risk that could be better managed by other, less legalistic means?
A far greater risk – and one which was entirely foreseeable, and indeed has to come to pass – is that the clause itself would be disclosed.
Shell was contracting with a public body in a highly sensitive political and media context.
There was a strong chance – indeed a virtual certainty – that at some point the terms of the sponsorship agreement would enter the public domain.
And when this happened, that the reputational fall-out would be far worse than any disparagement that the clause itself would ever manage.
The insertion of such a clause in such an agreement was a media catastrophe in the making.
Some lawyers may bleat that such a clause was ‘reasonable’ – and they are right insofar that such a clause would be sensible in a normal sponsorship agreement between private parties.
But the very same provision can be absolutely lacking in reasonableness in this media and policy sensitive context.
To the extent there was any serious risk of disparagement by the science museum of Shell, then Shell should have taken the view that there were far better and less legalistic means of addressing the risk.
And the science museum should in turn have insisted that there should be no clause that would limit their ability to discuss any of the issues relevant to the sponsorship.
In essence: this was not a contractual clause that Shell should have insisted on.
And it certainly one to which the science museum should not have agreed.
Thank you for reading.
Please support this liberal and constitutionalist blog – and please do not assume it can keep going without your support.
If you value this daily, free-to-read and independent legal and policy commentary for you and others please do support through the Paypal box above, or become a Patreon subscriber.
You can subscribe for each post to be sent by email at the subscription box above (on an internet browser) or on a pulldown list (on mobile).
This blog enjoys a high standard of comments, many of which are better and more interesting than the posts.
Comments are welcome, but they are pre-moderated.
Comments will not be published if irksome.