1. chapter 5
Contract Law

2. Chapter Objectives
After reading this chapter, you will know the following:
The elements of a valid contract
Common provisions within sport contracts
The many types of contracts that are found in the sport industry
The issues that arise when a sport contract is breached

3. Definition of “Contract”
“A promise, or set of promises, for breach of which gives the law a remedy; or, performance of which the law in some way recognizes a duty” I make a promise…if I do not fulfill the promise, there can be legal consequences…depending on consequences my “promise-breaking” caused

4. There are 2 types of Contracts
Bilateral Contract – “A contract that contains two promises: the offer and the acceptance”
York college will pay Tim Lewis 1 million dollars to teach business this year. Tim Lewis accepts and must teach business in a professional manner
Unilateral Contract – “A contract in which the offeree accepts by performance rather than by promise” – Tim Lewis pays a premium to State Farm Insurance, if something happens, State Farm will pay my claim.

5. Elements of a Contract Offer* Acceptance* Consideration* Legality^
Capacity^
*These 3 elements are required
^These can render the contract null and void

6. Offer
Made by offeror – “a conditional promise to do or refrain from doing something in the future”
Creates power of acceptance – “the act of agreeing to an offer by words or conduct. It must be clearly communicated.”
May provide the way that another party can accept the offer – “Would you like to purchase my super bowl ticket? Sure. (Is this a contract?)
Frank, will you purchase my Super Bowl ticket for $1000? Yes. (Is this valid?)

7. Acceptance Acceptance by the offeree or agent (not third party)
Acceptance “Must be in positive manner through words or conduct”
Not changing terms – Yes, but….
Communication to the offeror
Not silence – Unless we hear from you….
Bilateral contracts (promise for a promise – the offer and the acceptance) Should have some kind of reproducible proof…a copy or a receipt
IM’s and text messaging have become common forms of communication…so watch out!

8. Consideration
Each party must provide consideration – “The exchange of value or benefit that each party agrees to give up as a result of the contractual agreement.” or What each party gets in return for accepting the offer
Consideration cannot be:
a gift – the giving party gets nothing in return
For past performance – see example below
For illegal acts – this is not enforceable by law
Example: Chris receives a gold watch from the organization for 20 years of service. A few weeks later the watch breaks and Christ wants the organization to fix the watch.

9. Examples of Consideration
Money for the promise to provide a meal
Money for the promise to provide use of an arena
Promise by a restaurant to host a Halloween party in exchange for having the restaurant decorated for Halloween (decorating products and services)
An act or promise not to act (forbearance)
Promise to pay a salary for the work (act) of an employee
Promise to release a worker from an employment contract if she agrees to not open a business in the same geographic area for a certain time (forbearance)

10. Legality and Capacity
Legality: Even with offer, acceptance and consideration will be a contract only if it covers something legal.
Capacity: The ability to fully understand something.
Mentally ill
Mentally handicapped
Minors
People under duress (physical and psychological)

11. Typical Provisions of Contracts
Party designations – Specific names (parties)
Term: Length of time (specific dates)
Warranties and representations: Promises in the contract
Obligations and duties
Termination Provisions – If this is not done, we reserve the right to terminate….

12. Let’s look at types of various sports related contracts
Employment –Athlete (College)
Employment – Athlete (Pro)
Endorsement
Employment - Agent
Employment - Coaches
Game and Event Contracts
Waivers
Lease Agreements
Seat License

13. College Scholarship Contracts
Student-athletes: Contracts with the university
National letter of intent (start the expense of the acceptance process – must obtain a release from the school at that point)
Scholarship (money received in exchange for “faithful” service and play

14. Employment Contracts: Pro Athletes
League collective bargaining agreement
Contract between players (union) and owners (league)
Uniform Players Contract: Standard contract for all professional athletes in a league
Endorsement contracts
Athlete agent representation agreements

15. Employment Contracts: Coaches
College and professional: Both incredibly high salaries
Benefits and Bonuses
Termination

16. Game and Event Contracts
Game contracts: For game or contest itself
Event contracts: Hosting overall event that may surround a game

17. Waivers and Releases Form of contract Use Invalid if signed by minor
Signed before event
Participant absolves organization from liability for injuries suffered at the event
Use
Club sports
Health and fitness
Invalid if signed by minor

18. Facility Lease
Agreement between facility owner and team or sport organization
Offer: Promise to play at facility (team)
Acceptance: Funding and maintenance of facility (city or district)
Consideration: Rent or payments (team), maintenance and revenues from use (city or district)

19. Seat License Season ticket lease agreements
Can include special fees and charges
Can require pre-payment or donation
Can be passed on in perpetuity, BoSox)

20. Unique Contract Law Issues
“Parole Evidence Rule” – the final contract represents the full contract regardless of previous versions
Statute of Frauds Considerations – 3 types of contracts that must be in writing
Sale of land or property (need land specs)
Sale of goods over $500
Contracts that cannot be performed within one year of making

21. Remedies for Breach of Contract
1) Damages
Compensatory – make up monetary loss
Consequential – indirect monetary loss
Liquidated – agreed upon breech damages (opt out clauses)
2) Specific performance
Court ordered to “carry out” contracted duty
3) Duty to mitigate
Harmed party cannot sit around and do nothing while damages occur. The case of the “water sprinklers”

22. Alternative Dispute Resolution (ADR)
Arbitration: This process is final and binding. A third party listens to both sides and both proposals. One proposal is selected.
Mediation: A private, informal process where a 3rd party helps the two sides reach an agreement; this is sometimes called facilitation

23. Special Capacity Issues
If a minor enters a contract, contract is “voidable”:
Minor can ratify (make contract valid)
Minor can disaffirm
Adult under contract has no choice
Exception is disaffirmance: Words or conduct to show intent not to be bound by the contract; restitution
When age is misrepresented: “Shield, not a sword”
Letters of intent are signed by both athlete and guardian
Intoxication: Does this make contracts voidable?
Mentally Incompetent: Void, voidable, or valid?

24. Management Perspective on Contracts
Get it in writing.
Read the contract thoroughly.
Keep copies of all contract documents.
Use good faith when negotiating contracts.
Note deadlines for performance.
Ensure the performance of third parties.
Share contract information with those who need to know, and educate staff on the consequences of contract breach.
Resolve ambiguities as quickly and fairly as possible.