This article is written by Madhav Gawri, a student of Vivekananda Institute of Professional Studies. In this article, he explains the intricacies of a Sports Contract.
Table of Contents
Introduction
‘Sports’ is an activity involving physical efforts and aptitude in which individuals or teams compete against each other. The activity of sports is classified under the wide genre of entertainment. Sports development comes under the domain and ambit of the states up to state levels. At the national and international level (international treaties and obligations), it falls within the realm and remit of the Union Government and its residuary power and within the ambit of entries 10 and 13 of the Union List in the Seventh Schedule of the Constitution of India. There is an absence of specific enactments to facilitate a holistic overview of rules and regulations upon the sports in India. But, the National Sports Development Code 2011 is an underlying advance towards the penultimate goal of organised sports law in India.
Business in Sports Law
Business has become an essential aspect in organised sports. Sports as it is exhilarating, but with regard to proficient and organised sports, the commercial aspects of sports are a huge part of it, which drives the industry and makes it popular. This commercial aspect is administered by the intensity of contract law and the obligation to fulfil it. Commercial endorsement deals, new ventures, and new players like radio, television, licenses, sponsors, lawyer, and agents are a huge part of the organised sports nowadays.
With the development and an increase in the number of players in this industry, new regulations and rules were introduced to keep in check the numerous disciplines of business (marketing, management, finance, technology, ethics, law, etc.). These regulations were imposed on the sharing of revenues, salary caps, luxury taxes, and luxury boxes.
Contract and Sports
As stated earlier, almost every aspect of sports law is governed by contracts that are legal and binding by law. Most sports contracts are express contracts, meaning that the parties to the agreement come to a consensus amongst themselves by words spoken or written and expressions. Virtually, there is no space of implied contracts in the sports industry. In India, the Contract Act, 1872, governs the contract law. Matters in which contracts need to be agreed upon are:
- The sale of media rights in respect to a sporting event or competition. For example, Star Sports has the exclusive media rights to broadcast the English Premier League in India.
- Sponsorship Rights. For example, Oppo used to be the sponsor of the Indian Cricket Team jersey from the year 2017 to 2019.
- Participation rights and Obligations in major event or competitions
- The eligibility of individual athletes or teams to compete in particular competitions or events
- Management contracts between athletes and managers
- Membership rights in sporting clubs or organisations
Kinds of Sports Contract
Professional Service Contracts
It is also known as a Standard Player Contract. It is in a ‘boilerplate’ form, which means a contract in standard working can be reused over and over without change. The contract offer to all the athletes is the same, but it only differs in salary and bonus. There can be amendments and addendums to this contract also. But the basic structure remains the same.
Endorsement Contracts
An endorsement contract is always unique and special, depending upon the situation and type of endorsement the athletes are getting. An endorsement contract is one of contractor and independent contractor agreements. It allows the sponsor to use the athlete’s name, image, or likeness in connection with the advertisement of the sponsor’s product or service. Moreover, if a contract’s covenant extends beyond the scope of the terms of the contract, under section 27 of the Indian Contract Act, 1872, it would be void and not enforceable.
Appearance Contracts
An appearance contract compensates the athlete for appearing in different public functions for any institute, brand, or company. The athlete may be paid for an appearance at a public reception, sports camp, or a golf tournament.
Player Agent Relationship
A player-agent relationship is significant in any sports. A sports world is a place where athletes can be taken advantage of and involved in scandals or drug violations. An athlete needs to trust his or her agent, and more importantly, the agent needs to trust his or her athlete too.
An agent can be defined who handles contract negotiations, public relations issues, and finances of an athlete. The relationship between an athlete and an agent is fiduciary. This manifests the agent to act on behalf of the player.
Contract Formation
The player and the agent form a legally binding agreement in which both the parties promise that there would be legal proceedings if either breach the contract. These contracts bind the athlete legally to the agent until their contract expires or is revoked.
Mutual Obligations
In athlete-agent contracts, not only do agents have rights and duties they must perform, but the athletes do as well. Although it is typical for an agent to have more responsibilities than the athlete in a contract between the two, the athlete’s performance on the court, field, and commitment not to breach the contract is essential. For any contract to work, there must be trust and loyalty between the parties.
Termination of Sports Contract
It is an act that occurs wherein a contract can be legally terminated before the contractual duties and obligations are fulfilled. A sports contract may be terminated for many reasons, but the reason has to revolve around these four rationales in India:
- By Performance.
- By Express Agreement.
- Under the Doctrine of Frustration.
- By Material Breach.
The termination of sports contract is based on the already set precedents of termination by the Indian Judiciary and the Indian Contract Act, 1872.
Remedies in Sports Contract
Specific Performance
It means fulling a promise made under a contract as agreed. Specific performance is governed by the provisions of the Specific Relief Act, 1963. Specific performance is granted by the court in those cases where it is impossible to fix compensation. The court directs the party to perform his promise as agreement as agreed at the time of making the contract. This remedy is an equitable and discretionary remedy.
If Sports Contract is a contract of employment, it falls under the category of personal service, and specific performance cannot be granted for such a contract.
Reasons for giving Specific Performance in Sports Contract by the Courts:
- The contract at issue was not an ordinary contract of employment.
- Specific performance is the primary remedy for breach of contract.
- Employee’s principal reason for leaving was a commercial one and not a breakdown in the relationship.
- Practical Considerations are irrelevant to the court’s equitable discretion to refuse specific performance.
Remedies Against Unfair Dismissal
For a sportsperson in India to avail the remedies for unfair dismissal, first, he or she has to see whether they fall under the definition of ‘workman’ and ‘continuous service’. If a sportsperson falls under the ambit of the Industrial Disputes Act of 1947, then all the remedies would become available under the act to workers and would also be available to all the sportspersons.
The situation of ‘Constructive Dismissal’ is also a phenomenon that occurs when there is an indirect and unfair dismissal. Constructive dismissal is when the employee is made to resign, so there is no actual dismissal, and the employee feels he or she has no other alternative. It results from the employer’s action towards the employee, where the employee feels that there has been a fundamental breach of contract. The breach can be an actual breach of contract or a breach of an implied term, e.g, support, payment.
The court has to determine whether any of the employer’s actions could have been a breach of the contract of employment. The employee has to establish:
- There must be a fundamental breach of contract on the part of the employer
- The employer’s breach caused the employee to resign.
- The employee did not delay too long before resigning, thus affirming the contract and losing the right to claim constructive dismissal.
The claim for it carries the same compensation award as another breach of contract either in the form of monetary compensation or be reinstated as an employee again.
Conclusion
The entertainment business is on the rise and along with the sports industry. India is in dire need of a mainframe that can govern all the sports-related transactions, starting from enrolling a sportsperson into a team to various endorsements. The Indian Contract Act, 1872, and the Industrial Disputes Act of 1947 are not sufficient to govern all aspects of a sporting business. Sports entertainment is an ever-growing industry that does have significant effects on people’s lives. The Indian Laws are missing holistic legislation that governs every step of the sports industry. Due to the missing enactments, we are witnessing unfair dismissal of athletes, sports turning into a money-making business, and non-governmental organisations imposing their will on athletes. The need for a legislation that would promote fairness and the true spirit of sports in India is needed so that the athletes and the organisations, both are protected.
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