Like other reality TV show participant contracts, the Survivor cast member contract includes a clause that disclosing information about the show in advance will result in “liquidated damages” of $5 million per incident, which is not, as the contract says, a “penalty.”
On Concurring Opinions, George Washington University professor of law Lawrence A. Cunningham analyzes the contract, and concludes that the $5 million in damages may not be enforceable, and CBS would have to prove its actual damages in each incident because of how different each kind of breach is.
He writes that the contract’s “linguistic maneuvers are all intended to promote the clause’s validity under ancient contract law doctrine. This enforces party attempts to set damages at compensatory levels when it is hard to determine them but denies effect to those designed to coerce, penalize or prod parties to contracts. The trouble with the CBS clause, however, is that it is very long on such verbal protestations and short of any actual attempt at estimation.”
That means it may be unenforceable. Cunningham writes, “In the piquant phrase from a famous contracts case by Judge Richard Posner, CBS’s stipulated damages are ‘invariant to the gravity of the breach.’ There is a very good chance that this clause would be invalid in respectable US courts properly applying basic contract law principles. CBS would then have to prove its actual damages the usual way. That requires showing what they are with reasonable certainty, showing that they were foreseeable, and showing that it could not with reasonable effort have mitigated them. It would be interesting to see how far the company got in such a case and what the contestants would do afterwards. Maybe go berserk.”