Pre-Contracts in football

Published 16 June 2014 By: Matthew Chantler

Football in Mud
As clubs continue to spend millions of pounds on their training facilities and training to develop their young players and to attract the best young talent, it is common practice for clubs to ask young players to enter into pre-contractual agreements.
Often, this practice involves young players, who are otherwise unable to lawfully enter into a contract (normally the scholarship agreement) due to their age and the applicable football regulations. For example, the Rules of the FA state that a player under 17 years of age may not enter into a contract of employment except under a scholarship and a player under 18 years of age may not enter into a contract of employment (see C1 of the Rules of the FA1 and Regulation 60 of the Regulations of the Football League Limited2). The practice may also be used by clubs to acquire players from abroad which may bring into effect Article19 of the FIFA Regulations; Article 19 provides that international transfers of players are only permitted if the players is over the age of 18. However, are such pre-contractual agreements enforceable?
 
There are many examples of these agreements – be it by way of a letter for players to sign, or undated contracts, or clubs producing a “Deed of Undertaking” – however they all have the same goal; to tie a player into a scholarship and/or Premier League contract before the player is lawfully able to actually sign the contract. 
 
Pre-contractual agreements typically contain:
  • the basic terms of the student arrangement, scholarship contract and/or Premier League contract;
  • provide that the Premier League contract is conditional upon a trigger that can be activated by the club (for example, serving notice on the player);
  • the player’s remuneration details for entering into the contract/deed; and
  • representations and warranties by the player (and often parents or the agent too) that typically include the acceptance of the scholarship agreement when called upon, entering into the scholarship agreement and contract, and the parent and/or agent procuring the player to sign the same, and an obligation to do such other acts or things as to ensure the registration of the contracts and possibly an obligation not to solicit or accept other offers of employment. 
The key question is whether the pre-contractual agreement is legally binding? Sometimes, the player may want to enforce it (if, for example, they have lost form or have become injured and the club won’t offer the actual contract); whereas, sometimes, the player may want a way out (usually when they’ve received a better offer elsewhere).

 

The answer depends on basic principles of contract law: is there an offer, an acceptance, consideration, an intention to create legal relations and certainty of terms? 
 
Clearly, the aim of such pre-contractual agreements is to circumvent the legal issues, and the applicable regulations, by getting the player to enter into an agreement that attempts to satisfy the five basic elements for a contract.
 
They set out the terms (the offer), have provision for the player’s/parents/agent’s signature (acceptance), often provide for a nominal payment (pounds sterling) of which the player acknowledges receipt (consideration), sets out the intended employment relationship (intention to create legal relations), and either contains the basic terms of the standard contract(s), or appends the standard contracts, post dated to when the parties intend them to take effect; thus potentially removing any possible “agreement to agree” arguments.
 
Even if the pre-contractual agreement contains the five basic elements, it may still be open to challenge, as the player will often be a minor, under the age of 18, and therefore, under common law in England and Wales, for the agreement to be binding it must be a contract for “necessaries” (see below) that is beneficial and contain no unduly onerous terms. It seems unlikely that it could be argued that the standard contracts (the Premier League contract and/or Scholarship Agreement) contain onerous terms, however the agreement itself may well be considered to be onerous due to its nature and length; and could arguably amount to being a restraint of trade in the authors opinion (Watson v Prager [1991] 1 WLR 726 in relation to contract duration. See also Leeds Rugby Limited v Iestyn Harris [2005] EWHC 1591 and Proform Sports Management Ltd v Proactive Sports Management Ltd [2006] EWHC 2812 (Ch) in relation to restraint of trade).
 
Examples of “necessaries” includes education and apprenticeship, which arguably covers the student arrangement and scholarship contract, although arguably does not cover the professional contract or the agreement as a whole. Clearly, a contract of employment is capable of being upheld as for a minor’s benefit, but typically such pre-contractual agreements here go beyond a simple employment contract for necessities.
 
The pre-contractual agreement must also be beneficial to the player (and it is often argued that they are) and the terms must not be oppressive, which can give grounds for challenge depending on the total term of the contract(s) that the player is tied to (Watson v Prager [1991] 1 WLR 726 above). 
 
The agreement must be “necessary” and in the player’s benefit at the time it was entered into. As the agreements are designed to protect the club and “tie” the player in, this may not be the case. The question is, could the club justify the agreement in the event of a legal challenge?
 
If it is held that the agreement is purely for the protection of the club and not for the player’s benefit then it may be found to be void (due to one of the above).
  
In the Aylesbury case (Aylesbury Football Club (1997) Ltd v Watford Association Football Club Ltd (unreported)), the Court found that the contract was not for the minor’s benefit. The Court held that a football club did not induce a breach of contract, as the seventeen-year-old player could not be bound by the contract. It was held that the player did not need to enter into a contract with Aylesbury to receive training and experience. 
 
Further, (i) since the FA prohibited such arrangements (Rule C)3, the minor’s contract could not be registered with the FA, (ii) for an initial period, at least, his wages were to depend upon the will of his employer, and (iii) there were restrictive covenants in the agreement to prevent him playing for another club, or indeed any sport. 
 
It was concluded that the contract was not to benefit him at all, but to ensure Aylesbury could negotiate appropriate compensation.
 
Therefore the question remains are pre-contracts enforceable? As the agreements may not be registered (see (i) above), are often at the club’s option (thus possibly covering (ii) above), and contain restrictive covenants (see (iii) above) it would be interesting to see if the Court would hold the same view on the current pre-contractual agreements used by clubs. It is certainly questionable and will depend on the facts of the case.

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Author

Matthew Chantler

Matthew Chantler

Matthew, a solicitor at Mills & Reeve LLP, specialises in Sports Law and is an FA and RFL Registered Lawyer. He advises players' associations including Professional Players Federation, Professional Footballers' Association, PFA Scotland, Rugby Players Association, 1eagu3 and their members, a number of professional football clubs, players and agents on regulatory and legal matters. 

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