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Chapter 8 Contracts
Terms in this set (45)
Contracts manage the business operation of sporting organizations.
Lawyers, agents, & executives draft, examine, & interpret contracts regularly.
Contract law comes from common law, the Uniform Commercial Code, & federal & states statutes.
A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
Must state the obligations of each parts & the repercussions should one part fail to fulfill them.
Contracts can be written or oral.
A contract must contain:
1. Agreement between parties (Mutual Assent)
2. Exchange of consideration between the parties
3. Proper subject matter (Legality)
4. Competence on behalf of all parties (Capacity)
A valid contract exists after the parties have agreed to all material facts of the contract & a meeting of the minds has occurred.
Parties to a contract obligate themselves to the terms of the contract through offer & acceptance.
Occurs when one party presents terms of an agreement to another party, & the other party is in a position to respond.
A willingness to be bound by the terms of the offer.
Is the thing of value that has been bargained for in exchange for a promise.
A contract is not enforceable until both parties receive something of value out of the exchange.
All parties to the contract must be competent to enter into the contract.
A party might lack the necessary capacity if he or she is a minor (under 18), under the care of a guardian, or intoxicated at the time the party enters into the contract.
Capacity is of particular concern in collegiate sport, given that many high school athletes commit to play for colleges & universities while minors.
A court will not enforce an illegal contract.
Additional Contract Law Doctrines
1. Statute of Frauds
2. Parol Evidence Rule
3. Promissory Estoppel
Statute of Frauds
Certain contacts must be in writing to be enforceable.
Parol Evidence Rule
A valid contract is the final statement of agreement between parties.
Allows individuals to recover the benefit of a promise made even if all elements of a contract don't exist.
Other Contract Law Issues
A false assertion that induces another party to enter a contract.
1. Unilateral Mistake
2. Mutual Mistake
One of the parties to the contract makes a mistake as to some material fact contained in the contract which has an adverse effect on the performance of the contract.
Both parties share a misconception about a fact upon which they base the agreement.
The clauses involved are one-sided & result in oppression or unfair risk to one party.
Parties believe they have a meeting of the minds but are operating under different assumptions.
Breach of Contract Remedies
1. Compensatory Damages
2. Consequential Damages
3. Punitive Damages
4. Equitable Remedy: Specific Performance or Duty to Mitigate
Awarded to the non-breaching part to make that party whole under the contract.
Parties may also agree to the damages that will be caused in the case of a breach of the contract in the form of a liquidated damages clause.
Damages available to the non-breaching party to recover direct losses & costs.
Losses caused indirectly by a breach of contract.
Also referred to as "Exemplary" damages, & are designed to punish a defendant for improper conduct.
Liquidated Damages Clause
Parties may agree to damages that will be caused in case of a breach of contract.
An equitable remedy available to the non-breaching party that calls upon the opposing party to perform the contract.
Duty to Mitigate
When a breach of contract occurs, the injured party must take reasonable steps to lessen or mitigate the damages incurred.
Contract Law & Sports
Contracts govern most aspects of the sport industry including coach & player employment, broadcasting deals, sponsorships, ticket sales, facility leases, endorsements, merchandising & licensing.
The sports industry uses both employment & non-employment contracts.
Contain clauses or provisions that govern the employment relationship.
Employment contracts are also industry specific.
Contracts specify the term of employment & compensation.
Contract outlines job responsibilities.
Coaches Contracts Compensation
Generally consists of base salary + performance based incentives.
Coaches Contracts Termination Clauses
Outline ways in which contract can be terminated.
With cause termination occurs when the employer terminates the contract prior to its term expiring for reasons such as breach of the contract, criminal conduct, improper behavior, or violation of team rules.
Termination without cause occurs when the employer wishes to end the contract before the term has expired.
An athlete's total compensation includes base salary, signing bonuses, option bonuses, incentive clauses, & roster bonuses, as well achievement based earnings such as playoff or pro bowl appearances.
Can include performance bonuses based on statistics compiled by the player or team or bonuses based on awards given by the team or league.
Many players receive a one-time bonus for merely signing the contract.
Player Contracts Continued
A player & team may agree to a particular length of a contract, but they can also give each party an option to extend the contract.
Most standard player contracts include this clause that allows the team to trade a player without the player's consent.
Some players are able to negotiate an addendum to their contracts not to be traded.
All standard player contracts in sports have a skills clause that allows the team to cut a player from a team if the player fails to possess the requisite skill to continue to be on the team.
The primary difference between service contracts & employment contracts is the subject matter & parties involved.
Occurs between teams & vendors, officials, security staff, concessionaires, mascots, facility owners, media partners, etc.
Ensures that companies & either athletes or sporting events fulfill obligations agreed to as part of the sponsorship negotiations.
One of the key factors considered in any sponsorship contract is whether the sponsor is entitled to exclusively.
Sponsorship contracts contain provisions that grant or restrict use of the sport organization's intellectual property by the sponsoring organization.
Have become standard fare for many athletes.
Professional athletes can make millions of dollars if they acquire corporate sponsorship or endorsement deals.
Endorsers desire athletes who present a clean, wholesome image for their products.
Morals Clause for Endorsement Deals
Corporations thus require athletes to sign a contract that contains this clause, whereby the company can terminate the agreement if the player places the company in bad light or brings harm to the company's reputation.
Tortious Interference with a Contract
Occurs when a third party willfully interferes in a contract in place between two parties.
Tortious interference occurs between agents & athletes, leagues, & other corporations, sport sponsors & sport organizations or when a team pursues a head coach already under contract with another university.
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 9 Antitrust
Chapter 10 Labor Relations in Sport
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