Sporting Contracts

Types of Sporting Contracts

• If you are an AFL footballer, you have a number of different contracts

o With the sporting club you play with;

o With the competition (AFL, manager);

o With the governing body (broadcasters, sponsors, etc.)

• Opposite of this is the professional tennis player

o Not employed by any club nor is employed by anyone on a full time basis

o The tennis player is an independent contractor – s/he makes their decisions about

which tournaments to play in and the circumstances

▪ Directly contracts with organisers of major competitions

▪ Employs his/her own manager

▪ Employs a range of other staff to look after him/her

What type of contract are we dealing with?

Contract OF service = employment relationship

Contract FOR service = independent contractor

The distinction is important. If you are an employee in Australia, the employer has certain obligations

under the Fair Work Act if you undertake a contract of service. At CL, employer will be vicariously

liable for your actions in further of employment.

TEST: Per the HC, in differentiating between these two, must look at the situation as a matter of fact

and degree and apply the multi-facet test to the totality of the relationship (Hollis).

Relevant factors in applying the multi-facet test

• Control – does the employee have the authority to command how the work is to be done?

o Team sports: Does the AFL have lawful authority to command how a player performs

on field? To an extent – game plan, strategy, need to perform in a certain manner

o Individual sports: Serena Williams is probably controlled less in terms of her game

plan

• Who supplies the tools and equipment?

• Is the worker free to offer his trade to others?

• Who carries the financial risk?

• Is payment calculated by reference to attendance/participation/completion, or by hours

worked?

Significance

Characterising the contract determines whether other implied rights exist, for example, if there is an

employment contract, employer has OHS duties. Legal consequences flow from the characterisation.

Contract formation

1. Agreement

2. Consideration

3. Intention

4. Terms of the agreement be certain

5. By people with capacity to enter into the contract

Tri-Parte Contract

An example of a tri-parte contract is an AFL contract, whereby a contract exists between the player,

the club they play for and the AFL. Each party must still provide consideration.

The AFL playing contract is a tri-parte contract between:

• The player – who performs services for the club;

• The club – who pays the player and has responsibilities as an employer;

• The AFL – who run the league (e.g. makes the rules, broadcasting rights)

Offer and acceptance

- Who made the offer?

o The club makes the offer when the player is drafted

o Acceptance is communicated to the club

- Note: Australia does NOT have a concept of joint-employment. There can only be one

employer.

o Most likely employer is the club (never decided on). AFL has the right to de-register

the player, but most rights and obligations rest with the club.

Terms of a Contract

Express terms

• Written documentation or verbalised

• Example: AFL player contract

o Collective bargaining agreement

o Incorporated terms

o One thing that is not in the contract, is the obligation on the club to play the player

▪ Player commits to play when directed, but no obligation on the club to give

the player any match time

Implied terms

• Many terms are codified/modified into the employment contract

• Employer’s duty

o Of care;

o To provide work

• Employee’s duty

o Of care and competence;

o To obey the employer’s lawful and reasonable instructions;

o To cooperate with the employer in the operation of the employer’s

Three ways a term may be implied

1. Fact;

2. Law;

3. Custom

Implied terms must be:

• Necessary to give business efficacy

• Capable to be implied into terms of all contracts

By fact

For a term to be implied, the following conditions (which may overlap) must be satisfied (per BP

Refinery):

• It must be reasonable and equitable;

• It must be necessary to give business efficacy to the contract so that no term will be implied if

the contract is effective without it;

• It must be so obvious that ‘it goes without saying’;

• It must be capable of clear expression;

• It must not contradict any express term of the contract

By law

• The term must be applicable to a definable class of contractual relationship; and

• It must be suitable to be implied in all contracts of that class by reason of “necessity”

By custom

• There must be evidence that the custom relied on is so well known and acquiesced in that

everyone making a contract in that situation can reasonably be presumed to have imported

that term into the contract

Negative Covenants

EXAM PROVISIONS

- 3C: The player agrees not to play or train for any other club in the League without first

obtaining consent in writing of the club

- 3D: The player agrees not to engage in any dangerous or hazardous activity, including, but not limited to, motor cycle riding, hang gliding, parachuting or bungee jumping, which, in the

reasonable opinion of the Club, may affect the Player’s ability to perform his/her obligations under this K, without first obtaining the consent of the Club, which consent shall not be

unreasonably withheld

A contract is normally an exchange to do things, but can also include clauses not to do things (this is a

negative covenant).

Examples:

• I will not play for any other club

• I will not engage in dangerous or hazardous activities that may compromise my ability to play

AFL

The Law

• The court wont order specific performance to enforce a contract of personal service

o A court wont ORDER you to work for a particular person, or to do a certain thing

(Williams)

• This applies where an injunction not to do something would have the effect of leaving the

defendant with the choice of either continuing to work for the plaintiff or being idle

• EXCEPTION: Those who provide ‘special services’ including sportspeople

o Why? Cannot get anyone else to do what they do, in the way they do it – not a

common service that can be replaced

Buckenara v Hawthorn

Facts: GB was a champion player of his era, coming from WA to play for H (1982-1984). In late

1984, entered into another 2-year contract, with H getting an option to renew for another 2 years (4

years in total). Included a negative covenant not to play AFL other than H. At this time, B’s wife was

homesick and B claimed that he told the H that and the response was, dont worry we dont exercise the

option against your will (collateral oral K and H denied this). B then sued to enforce the oral K when

H purported to exercise the option to stay. B also said void for unreasonable restraint of trade – H

sued to enforce the negative K (WA Eagles were entering the competition based in Perth – B wanted

to play for them).

Held: Accepted H’s evidence of no collateral oral K (not to enforce written clause in contract). Held it

was not void as unreasonable restraint of trade. Courts are reluctant to grant specific performance –

i.e. make B play for H. However, B is 29 years of age (finite career and already injured, at prime of

career, but not many years left) = short period of time within which to maximize his income. Court

finds that B cannot do much else than play football – he has bad employment history, a lot of jobs that

are largely unskilled = only talent is playing football (factual findings by the court). They said that the

reasonable thing is to prevent him from playing from a team in competition with H (prohibited from

playing in AFL), but not in VFL etc. They tailored the remedy to the circumstances. Result: B stayed

at H.

Hawthorn v Harding

POL: Court will attempt to enforce clause to cure uncertainty

Facts: HFC agreed to pay Harding on the condition that Harding play for HFC in 1987. At the end of

1986 the terms on which he should play for HFC had yet to be agreed. Harding said that this means

that the previous agreement was merely an agreement to make an agreement and is not enforceable

Issue: Was he bound by the initial agreement?

Held: The initial contract had an arbitration clause. The uncertainty in the initial contract could be

cured by the arbitration clause. The arbitration clause set out how the new agreement should be fixed.

Bulldogs Rugby League Club v Williams

POL: Injunction granted to enforce negative covenant.

Facts: Williams’ contract with the Bulldogs had a negative covenant saying he wouldn’t play for

another team. Williams entered into a contract to play in the French Rugby League for Toulonnais

SA. Bulldogs tried to get an injunction preventing him from playing for Toulonnais.

Held: Injunction was granted. Williams falls under the sportspeople exception and the injunction

doesn’t make him ‘idle’ – he could always resume playing for the Bulldogs – and continue getting

paid by them.

Behavioural Covenants

EXAM PROVISIONS

- 3E: Agree to act in a sportsmanlike manner

- 3E: Agree to uphold the highest standards of professional conduct

- 3E: Agrees not to compromise the integrity and dignity of the League or the Club

These are promises by the player to behave in a certain way. Behavioural covenants may be found in

the standard playing contract or in the rules of the administration of the sport (e.g. AFL).

Ambiguous/Confusing

• Behavioural covenants can be ambiguous/confusing

• Promise to behave in a ‘sportsmanlike manner’

• Promise to uphold the ‘highest standards of professional conduct’

• Promises not to behave in a manner which ‘upholds the standards in the integrity of the game’

• Promise not to engage in conduct ‘unbecoming of a person’ in [insert sport]

• Promise not to bring the game of [insert sport] ‘into disrepute’

Construing contractual terms (Codafela)

• Courts assign to words used by the parties their ordinary meaning, not what the parties’

privately intended them to mean (unless the words have a specialised industry meaning)

The subjective beliefs of the parties are generally irrelevant

Dealing with terms that are ambiguous

Courts will:

• Seek to give effect to the parties ‘presumed intentions’

o The intentions which a reasonable person would have had if placed in the situation of

the parties (objective approach)

• Favour the interpretation which produces a reasonable (commercial) result

In resolving the ambiguity/choosing from multiple meanings

• Courts will have regard to evidence of surrounding circumstances or factual matrix to work

out the objective which the parties had in mind:

o The purpose of the contract; its background and context; the market in which the

parties are operating

o Consider the norms/ethos of the sport

Factors to consider when deciding if a player has brought the game into disrepute or damaged

the reputation of the league

• Does the conduct lower the reputation of the person or the league in the eyes of the ordinary

members of the public (D’arcy)?

• Did it come to the attention of the media – this was sufficient to damage the reputation of the

swimming team in D’arcy

• Was the conduct done on the field? (distinguish from D’arcy)

o Was it grossly outside the bounds of the rules of play?

• What are the norms and ethos of the sport? Do they condone this behaviour?

• What is the objective of the behavioural covenant?

• Is this really negative publicity for the player and league?

Grounds for challenging misconduct sanctions

• Review of the merits not generally available

• Failure to follow procedural requirements

o Failure to follow procedural requirements (substantive cf. technical breach)

o However, the court has a discretion to waive the requirement if the breach is

technical, not material and does not result in a substantial injustice

o Eg: afforded the player the opportunity to defend himself/herself and present their

side of the argument

• Review on the grounds of a jurisdictional error in the decision making process

o Purported decision maker lacks authority (D’Arcy)

o Purported decision maker has authority but makes a ruling beyond the limits of that

authority (e.g., imposes a penalty beyond that permitted by the rules)

• Breach of natural justice (procedural fairness)

o Implied – only excluded by express words or necessary implication

o Requirements are less stringent in matters before a non-statutory / domestic tribunal

than before a statutory tribunal

o Hearing rule (Rose v Boxing NSW Inc)

o Bias rule (Maloney; Waterhouse)

• Unreasonableness

o Requires there to be ‘some’ evidence (Australian Football League v Carlton

Football Club)

• Ulterior motive (improper purpose)

• Dishonesty / bad faith

Nicholas D’arcy v Australian Olympic Committee

POL: Brining the game into disrepute

Facts: D’Arcy was a member of the Australian swimming team. His contract obliged him not to

engage in conduct which is publicly known and brings or is likely to bring you, your sport, the

Australian Olympic Committee or the Team into disrepute. He struck a fellow Australian swimmer

Simon Cowely in the face and broke his jaw. The President of the Australian Olympic Committee,

John Coates, terminated Darcy’s membership of the team. D’Arcy appealed to the CAS.

Issue: Court had to decide whether D’s conduct was likely to bring him, the sport, the AOC or the

team into disrepute.

Test: Objective test – person through whose eyes we assess the conduct are the ordinary members of

the public (c.f. athletes)

Held in first instance: Bringing a person into disrepute = to lower the reputation of the person in the

eyes of ordinary members of the public to a significant extent. D’Arcy’s conduct was likely to bring

him into disrepute. People would learn that a member of the team was drinking and fighting. The

incident was under police investigation. Reasonable member of the public would think less of D’Arcy

as a result.

On appeal to CAS: D won the case (there was a breach of contract). CAS had no issue with the

merits of the decision – but there was a procedural mistake since the decision was made by the head

of the AOC rather than the Australian commission or the Olympic Chief De Mission. Decision was

handed back to the AOC to deal with again. The mere fact that the issue comes to the attention of the

media can bring the game into disrepute. What are the ethos of sport – is this the type of thing that is

accepted in the culture of this sport?

The right to work/be selected

General Law position = As long as you pay that person in accordance with the contract, you do not

need to give that person any work.

CL exception = In contracts of professional performers, there is a CL implied right to work.

Arguably, this applies to sportspeople -> but such a right is usually overruled by the specific terms of

the playing contract.

Test: Is the public performance necessary to further his/her career? Will his/her career suffer

detriment if denied public exposure?

Example: Clauses

• In lead up to Olympics, there is a shadow team selected of potentials

• From these potentials, the players are selected to the Olympic team

• There is absolute discretion as to how these clauses are to be exercised (i.e. decision made for

that purpose) -> is there criteria to be taken into account? Are these inclusive/exhaustive?

• What do you do if you are an athlete, but you haven’t been selected?

o Ask for reasons

o Appeal (read terms of contract -> is there an internal review first?) – generally will

have a right of appeal to non-nomination

▪ Issue is typically the breadth of the appeal

▪ All is governed by the Australian Olympic Team By-Laws

• Grounds of appeal

o Sole ground – nomination criteria have not been properly

followed (process itself), the appellant was not afforded a

reasonable opportunity to satisfy the criteria, nomination

decision affected by actual bias and no evidence

Right to be selected in a professional sport team

• If there is an express clause saying the club doesn’t have to select the player – the court won’t

imply the term into the contract (the courts wont imply a term into a contract if it contradicts

an express term)

• BUT, if there is no such express clause – would the court imply a duty to select the player?

o Unlikely – neither law, custom nor fact would justify it

o If the courts were to imply such a term, it would mean that AFL clubs could only

contract 22 players per team

• This means that the selector/coach has a wide discretion when choosing which players to

select

Are there limits to the discretion?

1. Honesty and reasonableness

o Even if absolute and unfettered, must exercise the discretion honestly and reasonably

(Meehan v Jones)

2. Fairness

o A term of fairness should be implied. Without it, selectors could be prejudicial

(Zusman v WA Bowling Association)

▪ Selection for the state team is no doubt the desire of all competitive bowlers.

If they were to be told that the selection process does not have to be fair and

it may consider anything the selectors wish, including their own prejudices, I

suspect that the response would be rude and resounding.

3. Good faith

o In sporting context:

▪ Should this be better expressed as using your best endeavours cf. good faith?

In the case of sportsperson, you cannot guarantee them selection in the team,

but you should be able to guarantee every opportunity to maximise your

prospects of selection. If you are the best, you will maximise your chances of

selection

▪ To Eric, this is what good faith means in a sporting context

o Good faith and fair dealing is the expected standard and anything less is contrary to

community expectations (Far Horizons)

4. Bias

o Cannot make a decision under the influence of bias (Luke Michael)

5. Trust and confidence

o Australian law does NOT imply this into employment contracts -> could be implied

by fact or custom

6. Irrelevant considerations o Cannot take ‘completely irrelevant considerations into account’ (De Pasquale)

7. Evidence

o Cannot be an absence of material upon which an honest person could have reached

the decision (AFL v Carlton per Tadgell JA)

Luke Michael

POL: Cannot remit a decision to the same biased decision maker

Facts: At trails for the kayak team for the 2008 Olympics, Luke Michael competed with an infected

finger. There were 6 spots on the team and he came 6th. Clint Robinson did not compete on medical

advice die to a respiratory infection. The Selection Panel had a wide discretion over who to pick. The

panel selected Robinson over Michael. Their reasons stated that they ‘gave weight to extenuating

circumstances and determined that under normal circumstances Clint Robinson would have a high

probability of meeting criteria for nomination to the AOC.’ Michael appealed.

Held: The Selection Panel was tainted by actual bias in favour of Robinson. They gave too much

weight to Robinson’s, whilst discounting Michael’s injury. Remitted the matter back to the Selection

Panel. The SAME selection panel made the SAME decision. Michael appealed again

Appeal to CAS: A decision should never be remitted back to a biased decision maker. They should

have put together a different selection panel.

Duty of good faith

• Emerging principle but the High Court has not determinatively ruled on it

• NOT implied into all contracts in all circumstances (HCA says facts specific)

What does good faith require?

• To act reasonably / not to act capriciously when:

o Performing contractual obligations

o Exercising power conferred by the contract

• To act honestly

• To do all such things as are necessary to enable the other party to have the benefit of the

contract (loyalty to the promise)

• On what basis?

o In fact?

o In law?

• In the case of sportsperson, you cannot guarantee them selection in the team, but you should

be able to guarantee every opportunity to maximise your prospects of selection.

Duty of trust and confidence

What is it?

• UK courts recognise an implied term in a contract of employment that an employer will not,

without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy

or seriously damage the relationship of confidence and trust between the parties

High Court recently held that (CBA v Barker):

• Australian law does not imply into contracts of employment a mutual duty of trust and

confidence

• BUT left open the possibility that such a term could be implied into a particular contract by

fact or custom

Are sporting contracts conducive to a mutual duty of trust and confidence?

• Sporting relationship is not conducive to a mutual duty of trust and confidence, as the club will

look after it’s own interest

• For most professional sports, clubs will trade players according to the club’s interest. They will

negotiate behind the player’s back

o E.g. Then St Kilda player McEvoy was traded to Hawthorn, he was doing an interview.

Got told after the offer was made to Hawthorn. Got told after the deal was done. Could

have vetoed it.

- While the HCA left open the possibility that such a term can be implied by fact or custom, a

sporting K is inherently not conducive to that sport

o A player can get traded mid-way through the season, but must play on

o Case of NBA player traded mid-game and was required to keep playing the game

Termination and repudiatory breaches

General Principles

Not every breach of contract allows for termination. Only certain breaches allow for termination =

condition, immediate term (not a condition, but is a serious breach entitling termination) or

repudiation (acting inconsistently with the contract, evincing an intention not to comply with the

contract).

If you are an aggrieved person – you may either accept the repudiation, terminate and sue for damages

or affirm the contract and proceed on.

Steps in answering problem

• Characterise the nature of the term of the contract being breached -> this will determine

whether this allows for termination

• Is there any action that would evince an intention not to comply?

• Elect to affirm or repudiate

Termination for breach

• Not every breach allows the other party to terminate the contract

• Can only terminate where there has been a:

o Breach of condition;

o Serious breach of an intermediate term;

o Repudiation (unwilling or unable to continue contract)

Termination for repudiation

• TEST: Would a reasonable person believe that the defendant was unwilling or unable to

perform obligations under the contract?

• The party’s inability or unwillingness to perform must:

o Relate to the whole of the contract;

o Relate to a condition of the contract; or

o Otherwise be “fundamental” to the contract

• The aggrieved party must elect to take one of two courses:

o Accept the repudiation, terminate the contract and sue for damages; or

o Affirm the contract, lose right to terminate and sue for damages for the breach…until

another breach occurs

Example: Essendon FC

AFL Standard Playing Contract

• Cl 7.3 – Health and Safety Practices o ‘The AFL Club shall provide a playing, training and working environment which is,

so far as is reasonably practicable, free from any risk to the health, safety and

welfare of the Player. Without limitation, the AFL Club shall observe and carry out

its obligations under the applicable Occupational Health and Safety Act or its

equivalent.’

• Cl 15 – Default and Termination

o … this Contract may be terminated by:

▪ (c) The Player if the AFL Club is in breach of any of its obligations under

this Contract and the breach continues for a period of twenty-eight (28) days

after notice in writing by the Player is given to the AFL Club requiring the

breach to be remedied.

Vitiating Factors

Factors that can lead to the contract not being binding on the parties that signed it.

Factors include:

• Misleading and deceptive conduct

• Duress

o Pressure often applied in negotiations fiercely

o Legitimate v illegitimate pressure

• Undue influence

o Unfair bargaining positions

o Status of person enables domination over another (i.e. husband v wife; teacher v

student)

• Unconscionable dealing

o Subset of undue influence – one party has a special disability that is being taken

advantage of by the other person

• Impropriety by third parties

o Undue influence by a third party

o In a sporting situation – the agent getting you to sign interest = get a huge

commission/percentage of kickback

• Statutory unconscionability

o Not relevant

Factors to consider:

• How would Pechstein be decided in Australia?

▪ Australian courts might take the approach that there needs to be a base-level, a floor

of minimum rights

▪ Employment law – FWA base level

▪ Consumer law – ACL base level

▪ This case argues that would also apply to athletes

• Would it be different for:

o A person entering:

▪ A high profile, well paid sport?

▪ E.g. AFL salaries are about 4-5X that of a regular employee, they get

the financial reward to compensate

▪ A smaller, more precarious sport?

▪ Don’t get the financial reward in exchange for rights

o A person represented by:

▪ A seasoned agent?

▪ A parent?

o A person coming out of:

▪ A private school?

▪ An indigenous regional community?

Pechstein

POL: The fact that P had no choice but to sign the contract and agree to the clauses was not unlawful

per se. It was unlawful though that the ISU abused its position and imposed a clause on P that was

unfair (not an impartial DM)

Facts: Young German speed skater that was starting to excel (getting results that she would be

capable of competing internationally). She applies to compete in international competition – and is

told to enter, you must sign a K with international skating union (if you don’t sign, you don’t compete

= sign or go home). Contract contains an arbitration clause that says if there is a dispute, it will be

heard by Court of Arbitration of Sport. Subsequently, she is found to have doped/prohibited

substances and is suspended for 2 years. She seeks to challenge the finding as conferred by the K. She

then finds that in accordance with the arbitration clause, the case will be heard by the sports federation

(her appeal will be held by panel of arbitrators selected NOT by the athletes). When she discovers

this, she has no faith in the independence in the panel = suspension confirmed.

Held: P had no choice but to agree to the clause. The clause was not unlawful per se, but, the ISU

abused its dominant position by imposing the clause on P. The dispute resolution method didn’t

correspond to the minimum standards of a fair trial and there was not equal treatment of the parties