UCLA sues Under Armour for early termination of contract

The University of California, Los Angeles (UCLA) has filed a law suit against US Sports apparel brand, Under Armour for early termination of the sponsorship deal of its sports teams. According to ESPN, UCLA has claimed an amount worth $200mn on the grounds of breach of contract, breach of implied covenant of good faith and fair dealing, and promissory estoppel and has filed the lawsuit for the same in the District Court of Los Angeles.  

In 2017, the agreement was signed between UCLA and Under Armour which was termed as the most lucrative deal in the history of college sports. However, earlier this year in June, Under Armour informed UCLA of its wish to terminate the contract due to the cash flow shortages amidst the global pandemic.

In a recent note to investors, it was revealed that the US Securities and Exchange Commission and the US Department of Justice would be imparting penalties on the brand for claiming its false financial statement, to make it look healthier so that the potential sponsorship deal with UCLA can be cracked.

In its lawsuit, UCLA specified, “Had UCLA known that Under Armour was making false financial statements in violation of law and SEC regulation, and falsely reporting its sales reported from quarter to quarter, UCLA would never have entered into the Agreement and/or would have terminated the Agreement at a time when other similarly-attractive sponsorship agreements could have been negotiated for UCLA.”

Mary Osaka, the university’s vice chancellor for strategic communications said, “It is unfortunate that Under Armour is opportunistically using the global pandemic to try to walk away from a binding agreement it made in 2016 but no longer likes.”

The Baltimore, Maryland-based company said, “We sought and remain open to working out a reasonable and appropriate transition for the university, and most importantly for the student-athletes. In fact, at UCLA’s request after the termination of the agreement, Under Armour continued to deliver athletic products for the 2020-2021 school year because we support athletes, even as it remains uncertain when sports will resume.”

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