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Analysis of sports contracts

The summer period is usually a busy period for many sports clubs; each club will be trying to sign their desired player/s, agents will be looking at making the best deal for their clients and athletes will be seeking new pastures in their career.

More often than not, such negotiations take place behind the scenes, with the general public only knowing at the end of such negotiations what the final price paid for acquiring the services of such player/coach was and, in some instances, the wages being paid for such services.

Prior to such acquisition being paraded to the fans and media, long negotiations would have been taking place between all the parties concerned, sometimes running into long hours of the night if no deal has been brokered yet and the deadline to sign players is looming.

Whilst it is usually the employer who would table a draft contract to be eventually signed between the club (employer) and the coach/player (employee), in some cases the employee himself could make demands for certain contract clauses to be inserted in the contract, such as bonuses and image rights.

The purpose of this article is to provide an analysis of sports contracts by looking at the elements that make sports contracts valid as well as to provide insight on key components to have inserted in sports contracts and key points to keep in mind when sitting around the negotiation table.

In order for a sports contract to be valid, there must be four elements present, the capacity of the parties to contract, the consent of the party who binds himself, a certain thing which constitutes the subject-matter of the contract and a lawful consideration.

It is important that all four elements are present simultaneously, meaning that if one of the above elements is missing or not adhered to, then the contract can be declared null and void.

Capacity means that all persons who are not under a legal disability, such as being a minor or interdicted, are capable of entering into a contract.

Both parties to the contract must give their consent, which consent cannot be vitiated in any manner, such as through fraud, violence or error.

If the consent is vitiated, than such contract may be null or annullable.

Every contract must have a thing (object) which one of the contracting parties binds himself to give, or to do, or not to do. Finally, a contract must have a lawful consideration (commonly referred to as ‘causa’), such as ensuring not to breach one’s fundamental human rights.

A contract without a lawful consideration or founded on a false or unlawful consideration, shall have no effect.

A sports contract is a legally binding employment contract done in a prescribed form; i.e. a written agreement.

Key components

Once executed, it is deposited with the relevant sports association of which the employer forms part of and should also be registered with the national employment agency.

A sports contract should have the following key components contained within it; the names of all the parties entering into such contract; usually the employer and employee, the validity (duration) of the contract, renewal rights (if any) at the end of the contract, termination clauses, the amount of wages to be paid, when and how such wages are to be paid, whether such wage is to be paid gross or net of tax and social security, clauses with respect to medical injuries sustained during the validity of the contract, dispute clauses, disciplinary clauses as well as the conditions to which the parties agree to bind themselves to, such as attendance of club events and providing the employee with housing arrangements.

Some sports contracts could also contain clauses on the release of the employee, especially with respect to players, benefits, such as being provided with a car, as well as bonuses connected with final league positioning.

Prior to signing a sports contract, it is advisable that any party to such contract first consults with their lawyer to ascertain that the terms of such contract are properly defined and lawful.

Make sure that their responsibilities and duties are clearly defined, and that all parts of the contract are duly completed and type written with no blanks left.

They need to make sure that the contract is governed by the law of a sound jurisdiction, preferably the jurisdiction in which such party is domiciled or where such performance is arising, and check that there are clauses dealing with force majeure especially in view of the ongoing COVID-19 pandemic.

They must also be sure that the other party is duly authorised to sign such sports contract.

The parties should also ensure that each clause is clearly understood by them, and, were needed, to ask for further clarity.

Once such contract is signed, each party should ensure that they are provided with a signed copy for their records.

Should any amendments need to be carried out to the original contract, such changes must be done by means of an addendum, duly signed by all parties concerned and making reference to the original contract.

Ultimately all parties should know that the terms of any sports contract can be negotiated by either party prior to such party signing same.

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