Chapter 2: Sports Contracts

All Contracts Offer Offer Acceptance Acceptance Consideration Consideration Legal purpose Legal purpose Capacity to contract Capacity to contract “Meeting of the minds” “Meeting of the minds” “Legally binding agreement” “Legally binding agreement”

All Contracts and Threes… Valid, void, voidable Valid, void, voidable Predict, provide, protect Predict, provide, protect Fraud, duress, mutual (bilateral) mistake Fraud, duress, mutual (bilateral) mistake K = O + A + C + (leg. + cap.) K = O + A + C + (leg. + cap.)

Sports Contracts Personal Services Contracts Personal Services Contracts Mostly “boilerplate” as the result of Collective Bargaining Agreements Mostly “boilerplate” as the result of Collective Bargaining Agreements Those not boilerplate usually involve standard language too: sometimes referred to as sponsorship, appearance or endorsement contracts. Those not boilerplate usually involve standard language too: sometimes referred to as sponsorship, appearance or endorsement contracts. Salary, bonus, options Salary, bonus, options SPK: Standard Player Contract SPK: Standard Player Contract

Consider: California’s Seven Year Statute Also known as De Havilland Law Also known as De Havilland Law Limits the amount of time anyone can be held to a contract for personal services for a maximum of seven years Limits the amount of time anyone can be held to a contract for personal services for a maximum of seven years Exception: recording artists Exception: recording artists Does De Havilland Law relate to long-term sports contracts? Does De Havilland Law relate to long-term sports contracts?

Minors and Contracts More related to entertainment law contracts than sports law. Why? More related to entertainment law contracts than sports law. Why? Minors = those under the age of 18 Minors = those under the age of 18 Are given special attention in California, New York and Tennessee, among other states, when it comes to entertainment-related deals Are given special attention in California, New York and Tennessee, among other states, when it comes to entertainment-related deals California: Coogan’s Law California: Coogan’s Law New York: Child Performers Education and Trust Act New York: Child Performers Education and Trust Act All designed to protect minor’s financial interest All designed to protect minor’s financial interest

Statute of Frauds Certain contracts must be in writing to be enforced Certain contracts must be in writing to be enforced Sale of Land Sale of Land Contracts which cannot be performed within a year Contracts which cannot be performed within a year Guarantors (sureties) Guarantors (sureties) UCC-sale of goods over $5,000 UCC-sale of goods over $5,000 Others…. Others….

Contract Riders Addendum to a standard contract Addendum to a standard contract Bonuses listed here Bonuses listed here For athletes: incentives-yards rushing, points scored, number of wins, number of plays. For athletes: incentives-yards rushing, points scored, number of wins, number of plays. For entertainers, the unique issues related to that artist including food, beverage, lodging and technical requirements for production are found here. For entertainers, the unique issues related to that artist including food, beverage, lodging and technical requirements for production are found here.

Damages for Breach of Contract Compensatory damages Compensatory damages Specific performance (injunction) but not likely for personal services (unique talents, abilities, and skills). Specific performance (injunction) but not likely for personal services (unique talents, abilities, and skills). Consequential damages Consequential damages Liquidated (agreed-upon) damages Liquidated (agreed-upon) damages Punitive: NOT available for breach of contract (sometimes called “exemplary”) but possibly available for tort actions Punitive: NOT available for breach of contract (sometimes called “exemplary”) but possibly available for tort actions

Waivers Valid as long as reasonable Valid as long as reasonable Sometimes referred to as disclaimer, release or exculpatory clause Sometimes referred to as disclaimer, release or exculpatory clause Must be conspicuous Must be conspicuous Tickets to entertainment and sports contests almost never considered valid waivers of legal rights Tickets to entertainment and sports contests almost never considered valid waivers of legal rights Discussed further in Chapter 3, Sports Torts Discussed further in Chapter 3, Sports Torts

Bankruptcy Consider bankruptcy issues in entertainment and sports contracts. (executory contracts). Consider bankruptcy issues in entertainment and sports contracts. (executory contracts). Consider recent changes in bankruptcy law as well. Consider recent changes in bankruptcy law as well.

Other Contract Issues National Letter of Intent (NLI) program National Letter of Intent (NLI) program Health club contract regulation Health club contract regulation Coaching contracts Coaching contracts Professional athletes and the “hold out” Professional athletes and the “hold out”

Contract Drafting Clauses and Considerations Title Title Describe the parties Describe the parties Term Term Purpose Purpose Duties and Obligations Duties and Obligations Compensation Compensation Termination Termination Guaranteed v. Non-guaranteed? Guaranteed v. Non-guaranteed?

Additional Clauses Morals clause Morals clause ADR ADR Modification Modification Governing Law Governing Law Merger Merger Waivers Waivers No compete clauses (covenants not to compete)- consider “free agency” No compete clauses (covenants not to compete)- consider “free agency” Exhibits and addenda Exhibits and addenda