Legal and regulatory considerations of minors in sport
Published 30 March 2015 By: Thomas Barnard
As professional sport becomes more and more lucrative, the need for clubs, agents and sponsors to find the next generation of talent becomes an ever greater concern.
As a direct result, clubs and agents are increasingly signing potential stars at younger ages. As an illustration, the youngest player to play in the Premier League was just 16 years and 65 days old1 and would clearly have been of interest to his club and sponsors long before making his first team debut at that age. Likewise, the stories of McLaren and Mercedes-Benz signing Lewis Hamilton to their young driver programme at the age of 13 are well documented.2
The interaction between clubs, teams, agents and companies on the one hand, and young sportspersons on the other, requires very careful management, however. In addition to specific legal requirements to bear in mind when contracting with minors, many sports – and in particular football – are now subject to extensive regulation when it comes to contracting with young athletes. The combined legal and regulatory framework can create a minefield of potential pitfalls for those that do not pay sufficient attention to the obligations imposed on them.
This blog looks first at the legal issues from an English law perspective. It is the legality of the underlying contract which, in the majority of cases involving minors, will determine whether any obligations assumed pursuant to the contract are enforceable. We then consider examples of the regulatory environments that have been created by international and national governing bodies to protect and safeguard minors in sport. The regulatory environment can be seen as an additional layer of protections afforded to young athletes.
The legal landscape
So far as minors in sport are concerned, it is “contract law” which is predominantly relevant to the obligations assumed and owed by one party to another. In England and Wales, the Family Law Reform Act 1969 (the “Act”) provides that the age of capacity for the purposes of contract law is 18 years old.3
The general rule is, therefore, that a minor’s contracts are voidable at his or her option; in other words, anyone under the age of 18 is entitled to cancel any contract that they enter into, unless they ratify the contract when they come of age (or shortly thereafter). A contract can be ratified in one of two ways: either expressly (by the minor re-confirming (usually in writing) that they agree to be bound by the contract) or implicitly, as a result of the minor acting in accordance with the terms of the contract (or from other surrounding circumstances which suggest that the minor has accepted the contractual obligations). The exceptions to this rule, which can be important in the sporting context, are considered below.
Whilst a minor has the option of cancelling such a contract, he/she is also entitled to choose to enforce the benefit of any contract that they enter into; in other words, the other contracting party does not have a corresponding right to terminate the agreement at will. The dichotomy between the contrasting positions of the minor and their contracting party creates a situation which, without more, leaves the contracting party (usually the agent, club or sponsor) in a precarious position: they are liable to perform their part of the bargain, whilst the minor can terminate at will.
As you would expect, the law has both developed exceptions to the general rule and found ways of ensuring that minors are not able to benefit unjustly from contracts that they refuse to perform.
Firstly, it is unlikely that a minor could insist on the other party to a contract performing their obligations in circumstances where the minor is not themselves prepared to fulfil theirs. For example, the counterparty who has contracted with the minor could rely on a “total failure of consideration” on the part of the minor to lawfully terminate the contract (ie. the minor has not performed any part of the contract, and cannot therefore insist on the counterparty’s performance). Those contracting with minors do not therefore need to be overly concerned that they will be liable to provide services where (for example) the minor, at the outset, refuses to pay the contract price.4
In addition to this, section 3(1) of the Minors’ Contracts Act 19875 provides that a court can order a minor to return any goods received pursuant to a contract which the minor has decided to reject. In the case of a minor terminating a sponsorship agreement, for example, a sponsor could rely on section 3(1) to require a minor to return any products that have been supplied pursuant to a sponsorship agreement.
Although this provides a safeguard in circumstances where goods have been supplied, the position is less clear where services have been supplied; as a matter of practical reality, it is unlikely that the services themselves could be returned by the minor. Other avenues of redress may be available to the counterparty, however, and in the case of the foregoing example of the supply of services to a minor, the supplier may have a restitutionary action against the child. If successful, the supplier would be entitled to recover from the minor the “fair market value”6 of the services supplied.7 The exceptions to the general rule may therefore assist, and indeed agents have tried to rely on them in a sporting context.
Contracts for necessaries and for education
The general rule (of voidability) does not apply to contracts for “necessaries”8 and a minor must pay for them.9 Necessaries includes, as you would expect, the absolute essentials (food, drink, clothing, for example) but also includes contracts for legal and medical services. It is the supplier, however, that has to prove that the goods were necessaries.10 In a sporting context, whether or not representation agreements fall within the categorisation has presented the courts with interesting considerations.
Before turning to analyse the exclusions in relation to sports specific contracts, it is worth looking at the second exception: namely contracts for education, employment or apprenticeship. Where a minor contracts for education services, or their contract is one of employment or apprenticeship, the minor will be bound by it.11 Contracts analogous to a contract of employment also fall within the exception, and one of the earliest cases to consider the matter found that a minor who had agreed to accompany a professional billiard player on tour was bound by the contract,12 the contract being analogous to an employment contract as the minor was being paid.
A modern approach
Although the older cases are still useful in determining what may or may not be a contract for necessaries or employment etc, today’s sporting industry would be unrecognisable to the judges that decided those early cases. Fortunately, a young Wayne Rooney inadvertently provided guidance as to whether representation agreements fall within these exceptions when his former agent litigated the matter back in 2006.
The case of Proform Sports Management v Proactive Sports Management13 concerned a representation agreement that Rooney had agreed with Proform when he was 15. Proform claimed that Proactive had induced Rooney to breach the representation agreement and that Proform was therefore liable in damages. In response, Proform claimed that agreement was not for necessaries or one of employment, such that Rooney could terminate it at will. If that was found to be the case, then it followed that Proform could not be liable for inducing Rooney to breach it.
Unfortunately (from an agent’s perspective) the Court held that a representation agreement was not a necessary and nor was it one of employment; it was the player’s contract with his club that allowed the player to earn a living. So even though a representation agreement will almost always benefit a minor, agents need to realise that they may not be enforceable – or that the minor can legitimately terminate at will – unless they contain an element of employment or education.
Containing educational or employment elements is one way in which agents can increase the likelihood that their contracts with minors will be enforceable. Whether such attempts are successful will be a question of fact in each case, but it is suggested that the more beneficial to the minor the contract is (in educational or employment terms), the more likely the contract will be binding on the minor. Care will of course need to be taken when drafting the contract to ensure that it is enforceable as a whole. Otherwise a situation could arise where the “beneficial” aspects of the contract are enforceable (ie. those which relate to the provision of employment or education) but other aspects of the contract (ie. those relating to image rights) are found to be severable or unenforceable.
The regulatory position
Although the law may seem to have the potential to operate unfairly so far as those contracting with minors are concerned, it must be remembered that the law has developed with the best interests of minors at heart. Balanced against this is the need to ensure that reasonable and beneficial contracts (from the minor’s perspective) are enforceable by both parties. One might argue therefore, and at least from an English perspective it may be sustainable, that no further protection of minors is required.
Yet nearly all sports are subject to some form of regulation when it comes to the issue of contracting or engaging with minors. Whilst the form and extent of the regulation will differ not only between sports, but within sports also,14 it nearly always offers additional protections to minors.
Take, for example, the regulation applicable to international transfers of minors in football. The starting point is that international transfers are only permitted if the player is over the age of 18: Article 19(1) of the FIFA Regulations on the Status and Transfer of Players (the “Regulations”).15
From that starting point, the Regulations provide three exceptions in which the international transfer of a minor is permitted.16 One such exception allows a club to sign an international minor provided that the transfer takes place within the European Union or European Economic Area and on condition that the player is provided with both a footballing and academic / vocational training.17 It can be seen that in this sense, the Regulations are broadly aligned with the English common law position requiring any contract to include an educational element. However, the Regulations go further: they do not allow an international transfer solely on grounds that the player will be paid by the club.18
As one would expect given the importance of protecting minors from exploitation, abuse and trafficking, the Regulations have teeth;19 the Spanish Football Federation (the RFEF) and FC Barcelona were both sanctioned in 2014 with fines of CHF 500,000 and CHF 450,00020 respectively.21 In addition, the club was also sanctioned with a national and international transfer ban for two consecutive transfer periods.22
In a further move to protect minors, FIFA’s recently introduced “Regulations on Working with Intermediaries”23 prevent a player and / or club from paying an intermediary where the intermediary has been engaged to negotiate the employment contract or transfer agreement of a minor.24
The controls introduced by football’s governing bodies are important: short of physical or sexual abuse, our domestic courts are unlikely to get involved in the contractual arrangements of minors unless and until they are litigated. The obligation therefore rests, to some extent, on governing bodies to safeguard the interests of minors.
Golf and the R&A’s position on minors
Like football, young professional golfers are increasingly seen as valuable commercial properties. The R&A, the organisation responsible for the Rules of Golf in all territories outside of the USA and Mexico, has therefore taken steps to safeguard minors. The Rules of Amateur Status25 (the “Rules”) set out conditions that must be fulfilled if a player, on entering into a representation agreement, wants to maintain their amateur status.
Rule 2.2(b) provides that an amateur golfer may only enter into a contract in respect of their future golfing career if they are over 18 years old. Further Rules apply to educational and golf scholarships26 but the R&A, through the implementation of the rule, is able to prevent minors from engaging in (potentially unconscionable) agreements: if they do so, they risk losing their amateur status.
It is apparent that the law provides safeguards for minors in sport. Most importantly the law, and the regulators and executive bodies that police it, seek to protect minors from abuse and exploitation. However, the law relating to the private, contractual relationships assumed by minors is also well developed, seeking to balance, on the one hand, the need to protect minors from economic exploitation with, on the other, the desire to leave parties to freely negotiate and arrange their private contractual affairs.
On top of the domestic laws, sports’ governing bodies have sought to provide minors with an additional layer of protections. The rules and regulations discussed in this article are but a brief overview of particular measures in particular sports. All governing bodies are, to one degree or another, concerned (and indeed mandated in some cases) to confer additional protections on minors. It is in that regard that the role of NGBs will become increasingly important as the commercialisation of sport continues apace.
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- Tags: England | Family Law Reform Act 1969 | FIFA | FIFA Regulations of Working with Intermederies | FIFA Regulations on the Status and Transfer of Players | Golf | Governance | Intermederies | Minors’ Contracts Act 1987 | Protection of Minors | Regulation | Rules of Amateur Status | Spain | Spanish Football Association (RFEF) | The R&A | Transfer of Minors
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