By Robyn Jeffries (Case Manager), Brayden Mulhern (Caseworker) & Daniel Torch (Caseworker)
The Sport Solution Blog is written by law students and is intended to provide information and the team’s perspectives on current issues. However, the Blog is not intended to provide legal advice or opinion. Athletes in need of assistance should contact the clinic directly at [email protected].
Contracts are more than just pieces of paper; they are binding agreements that dictate terms of engagement between parties. In the sports world, contracts can govern relationships between athletes, associations, sponsors, and other involved parties. Understanding contract basics is paramount for athletes to protect their rights and interests. Below are some key points every athlete should know.
Contracts in sports are legally binding agreements. Once signed, the parties involved must adhere to the terms outlined in the agreement.
Athletes must pay close attention to the content of a contract before signing. Contracts should clearly outline each party’s rights, obligations, and responsibilities, leaving little room for ambiguity or misinterpretation.
In certain circumstances, a contract can be partially or entirely invalidated. This can occur due to unclear provisions or if the contract is against public policy. However, it is critical for athletes to raise concerns regarding a contract before signing it. Once executed, it is challenging for an athlete to contest its terms. Courts have held that concerns should be addressed before the contract is finalized. In cases where the athlete has little bargaining power, athletes should make formally known any reservations about certain terms of the contract. Without this, the athlete is in no position to complain later on.
Understanding these contract basics empowers athletes to protect their rights and interests in the competitive world of sports. Whether negotiating sponsorship deals or participation agreements, clarity and vigilance are key to ensuring mutually beneficial agreements.
What is a contract, and what types might an athlete encounter
A contract is a legally binding agreement. A contract represents the meeting of the minds of the parties. Contracts in sports are subject to the same principles of contract formation as any other form of employment agreement. There are a multitude of contracts that an athlete may encounter throughout their career. Here are some of the most common ones:
Player Contracts: These are agreements between athletes and their teams or clubs, outlining the terms of the athlete’s employment or participation with the team. Player contracts typically specify the athlete’s salary, bonuses, duties, rights, and obligations, including provisions related to performance expectations, conduct, and duration.
Endorsement Contracts: Professional athletes often enter into endorsement contracts with companies or brands to promote their products or services. These contracts may involve the athlete appearing in advertisements, endorsing products, making public appearances, or participating in marketing campaigns in exchange for compensation or other benefits.
Guaranteed Contracts: In certain sports, such as professional basketball and American football, athletes may negotiate guaranteed contracts that ensure they receive their full salary regardless of injury, performance, or other factors. Guaranteed contracts provide financial security and stability for athletes but may come with higher salary caps or other limitations for teams.
Performance Bonuses: Some athlete contracts include performance bonuses based on individual or team achievements, such as reaching specific statistical milestones, winning championships, or receiving awards and honours. Performance bonuses incentivize athletes to excel and achieve success on the field or court.
Collective Bargaining Agreements (CBAs): Professional sports leagues often operate under CBAs negotiated between players’ unions and league management. These agreements establish rules and guidelines for player contracts, salary caps, revenue sharing, free agency, and other aspects of player-employer relations within the league.
Insurance Contracts: Athletes may purchase insurance policies to protect against career-ending injuries or income loss due to disability. These insurance contracts provide financial compensation in the event of covered injuries or circumstances that prevent the athlete from playing or earning income from their sport.
These are just a few examples of the types of contracts that professional athletes may encounter. These contracts’ specific terms and conditions can vary widely based on the athlete’s sport, marketability, bargaining power, and other factors.
What are the essential ingredients of a contract?
Six elements are necessary for a binding and enforceable contract in Canada:
Capacity: In Canada, the legal age to enter a contract varies by province or territory, but you must typically be at least 18 years old. The person must also be of a sound mind while understanding all elements of a contract and entering into it. Generally, individuals under the age of majority, typically 18, may still enter into contracts in certain circumstances. However, contracts involving minors are subject to specific rules and limitations.
Offer: This is the manifestation of willingness to enter into a bargain with another party. It is usually the first step toward establishing a contract.
Acceptance: Acceptance is an unconditional willingness to be bound by request. Acceptance mirrors the conditions of the offer. If any variation is communicated from the party to which the offer was earlier made, the communication would not be an acceptance but a counteroffer. In the counteroffer case, the party who initially made the offer is to accept or decline the counteroffer.
Consideration: There can be no contract without consideration. Consideration is something of value given in exchange for a promise. A contract would clearly state what is being sought and for what consideration. In a typical athletic contract, the consideration flowing from the offeror of the contract would be a salary or other payments, while the consideration flowing from the athlete would be their athletic performance.
Mutual Agreement: For a contract to be valid and legally enforceable, the parties to the Contract must agree on the same terms in the same sense. If there is any confusion concerning any of the terms, articles, or considerations, where the parties to the Contract interpret it for a different purpose, it could invalidate the Contract.
Legality: A contract is automatically invalid or non-enforceable if any aspect of the contract is not legal. The Contract should be for a legal objective, procured via legal means, and executed legally. Any illegality in the object, procurement, or execution might make the Contract void, which could not be legally enforced.
Most sports contracts are express contracts. An express contract is a contract in which the agreement of the parties is evidenced by their words, whether spoken or written. There are virtually no more implied contracts in the sports industry. An implied contract is a contract in which the agreement is not evidenced by written or spoken words but by the acts and conduct of the parties. Regardless of whether a contract is implied or explicit, if one of these six essential elements is missing from a given contract, then either party may have legal grounds for repudiating the contract or arguing that a valid contract had never been formed in the first place.
Besides missing one of these six essential elements, there are other grounds for a contract to be deemed invalid or non-enforceable. While there are many grounds for this happening, some of the most common ones are listed below:
Misrepresentations: When one party to the contract, typically the offeror, makes specific intentional misrepresentations about facts or terms of the contract that are essential to the contract.
Mistakes: These are unintentional but can still invalidate a contract. An example would be an athlete’s contract stating that the athlete is signing up to play for a team in British Columbia when in reality they were meant to play for a team in Manitoba.
Undue Influence: When a party to the contract is pressured by either the other party(s) to the contract or by other outside sources, and the only reason they signed the contract was due to the pressure imposed on them, the contract will be invalidated.
Duress: Similar to Undue Influence, if a party to the contract only signs because someone else is making them feel as though they have no choice, and otherwise, consequences will follow, they have signed under duress, and the contract will be invalidated. Signing under duress typically means that someone has threatened violence against you or someone important to you or severe intimidation was used against you. However, there are other forms where someone can claim they signed a contract only under duress.
A Frustrating Event: When some external event occurs that is through no fault of either party to the contract, the contract may be invalidated. An example of a frustrating event could be what we saw in Canada with the COVID-19 pandemic, where many people could not perform their contractual obligations due to a multiplicity of factors brought on by the virus.
What are an athlete's rights as the offeree?
When an athlete is offered a contract, it is imperative for them to understand the nature of their rights and obligations as the offeree.
Request for more information or clarification: The athlete may request any details or clarifications required to satisfy the “mutual agreement” requirement. All parties to a contract must understand its terms and conditions before acceptance, as the contract then becomes legally binding.
Counteroffer: If the athlete disagrees with a term in the contract and wishes to have it clarified or altered, they may present the offeror with a counteroffer. This may also take place in the form of negotiations. A counteroffer will nullify the previous offer and transfers the right of acceptance to the initial offeror, who may then accept or reject the counteroffer or issue another counteroffer to the athlete.
Acceptance: The athlete may accept the offer. Accepting the offer renders the contract legally binding. Thus, acceptance should be deferred until the athlete understands and agrees to all terms of the contract.
Rejection: It is important for an athlete to understand that, when offered a contract, they retain the right to reject the offer entirely or in part.
Things for an athlete to be aware of:
Expiry of the offer: It is important to be aware of any timelines attached to the offer.
Revocation before acceptance: The offeror retains the right to revoke an offer at any point prior to the athlete’s acceptance.
Irrevocability after acceptance: An athlete must remember that once an offer is accepted, it becomes a legally binding contract, and they may become liable for breach of contract for failure to adhere to its terms.
Key Takeaways
- Be sure to identify what type of contract you are privy to, whether it be a playing agreement, a sponsorship contract, insurance contract, or broader CBA.
- Keep in mind the elements of a contract, which include offer, acceptance, consideration, capacity, and legality. If any of these elements are missing, there is NO contract/legally binding obligation for either party.
- Always be aware of your offeree rights to request more information, counteroffer, and accept or reject. Reflecting on contractual defects that may occur – including misrepresentations, mistakes, undue influence, and duress – may aid in seeking a potential remedy.
If you are unsure whether to sign a contract, seek independent legal advice or reach out to Sport Solution at [email protected].
Citations
AthletesCAN, “The Future of Athlete Agreements in Canada” (December 2021) online: <athletescan.ca/wp-content/uploads/2021/12/the_future_of_athlete_agreements_in_canada_final_eng_1.pdf>.
Rachel Islam & James Sifakis, “The Future of Athlete Agreements in Canada (Phase II):
Redefining the Relationship” (October 2016) online: <crdsc-sdrcc.ca/eng/documents/The%20Future%20of%20Athlete%20Agreements%20in%20Canada%20(Phase%20II).pdf>.
Sport Law, “A New View of Athlete Agreements” (May 7, 2006) online: < sportlaw.ca/a-new-view-of-athlete-agreements/>.
Sport Law, “Some Basics on Contracts” (September 5, 1996) online: <sportlaw.ca/some-basics-on-contracts/>.
Waddams et al., Cases and Materials on Contracts, 6th ed (Toronto: Emond, 2018).
Yellowbrick, “Understanding Sports Contracts: Key Factors and Negotiation Tips” (November 3, 2023) online: <yellowbrick.co/blog/sports/understanding-sports-contracts-key-factors-and-negotiation-tips/>.