Case of the week: Contracts
2 January 2012
28 October 2013
7 April 2014
Is Luis Suárez right: does an oral agreement between parties vary the terms of their written agreement?
22 August 2013
16 October 2013
16 December 2013
An image rights representation agreement in respect of a professional footballer engaged the doctrine of restraint of trade, despite the fact that exploiting his image rights could be described as ancillary to his occupation of playing football.
Appeal allowed in partProactive Sports Management appealed a decision on the interpretation and effect of an image rights representation agreement in respect of Wayne Rooney, held to be unenforceable as in restraint of trade.
Rooney had assigned his image rights to Stoneygate and together they entered into the agreement with Proactive. The eight-year contract agreed that Stoneygate would pay the appellant 20 per cent for services to the footballer. The agreement was successful for five years until the parties fell out.
Proactive had also acted for Rooney’s wife, Coleen, and the company, without any written agreement, had also been paid a commission of 20 per cent. When the defendants sought to terminate the contract Proactive treated that as a repudiatory breach and claimed for unpaid commission.
The judge held that the doctrine of restraint of trade imposed substantial restraints on Rooney’s freedom to exploit his earning capacity. As he was only 17 when the agreement was entered into he did not have the commercial nous to agree to such a contract.
Proactive, as the party seeking to enforce it, failed to show that the restrictions were reasonable. The court further held that Proactive was not entitled to commission on sums payable by third parties to Stoneygate under endorsement contracts secured by Proactive that had not been paid by the time the agreement was terminated.
Proactive submitted that, where it had procured a contract, it was able to claim commission even if the event took place after termination. It argued that the contract did not invoke the restraint of trade doctrine because Rooney was a footballer and the agreement was a way of obtaining extra income, but not his trade. The court held that it was the procuring of endorsement contracts that gave rise to the right to commission and not the ongoing provision of services.
The word ’payable’ had the effect that the right to commission arose when sums became payable under endorsement contracts, not when they were received. But there was no restriction on sums payable before the end of the agreement. Proactive was entitled to commission after the end of the agreement in respect of the contracts it negotiated. The appeal was allowed on this point.
However, the court found that the exploitation of image rights was almost always going to be an ancillary activity protected under the doctrine of restraint of trade.
There was an implied contract between Proactive and Coleen Rooney’s company on the same terms.
For Proactive Sports Management
John Newell, Herbert Reeves & Co
Christopher Jeans QC, 11KBW
Nicholas Randall, Devereux Chambers
For Rooney& Ors
Geraldine Ryan, Hill Dickinson
Paul Chaisty QC, Kings Chambers
Mark Harper, Kings Chambers
Proactive Sports Management v Wayne Rooney is the latest in a long line of cases where the restraint of trade doctrine has been invoked in a sporting dispute. The doctrine liberates professional sportspeople, freeing them from those who seek to control them.
Power in sport has undergone a seismic shift in recent years.
It used to reside with clubs and governing bodies. It now resides with the players. But who controls the players? The short answer is the agents. Agents frequently decide for whom a player will play and on what terms. They do so under agency agreements, which are often horribly one-sided.
This decision is important in changing the balance of power in football. The eight-year exclusive period was an illegal and unenforceable restraint of trade. Fifa regulations stipulate that no representation period agreement in excess of two years is valid. It would have been helpful had the judge been able to indicate, perhaps supported by the Court of Appeal, that the experience of Fifa as to the reasonable and fair duration of such contractual arrangements is to be preferred.
Nevertheless, this is a step in the right direction in liberating footballers from agents and managers. In defending this case Rooney may have done his fellow professionals a favour that will last long after his own playing career is over.
Mark Gay, partner, Burges Salmon