An Exploration of Interesting Clauses in Sports Contract

Introduction:

Sport is a social nonpareil phenomenon that has occurred since time immemorial for all tiers of society. It portrays the culture of the territory and exerts influence on people’s manner of living, status, moralities, health, relations, fashion trends, etc.

The game has now taken the form of an industry that we used to call the Sports industry. It is a large market economy, offering products, services, facilities, and ideas related to sport, sustainability, or vacay to its customers including individuals, organizations, and businesses that facilitate, promote and organize sports-based activities and events.

Sports contracts are the same as for everyday life – contracts that are legally binding between two or more teams. Failure to enter into any sporting contract, written or oral, without legal excuse is a breach of contract. Violations may include failure to perform as compelled, failure to meet the requirements of a sports contract, failure to play, breach of other sports contracts, affecting the employment of other athletes and coaches, and other terms related to the sports contract. The reimbursement for the breach can be both equitable and finance. In other words, the existing team can recoup monetary and/or specific damage.

Sports contracts are governed by The Indian Contract Act, 1872, and The Industrial Disputes Act of 1947 in India.^[1]

Kind of Sports Contract

1. Professional Service Contracts: These contracts are also known as Standard player contracts. These are usually in the form of a “boilerplate”. The boilerplate form is the most generic and uses common languages. These contracts can be reused without any modification. Therefore, these contracts are the same for all players except for the difference in salary and bonus of players and include employer-employee relationships. The parties can make modifications according to their own needs.
2. Endorsement Contracts: This contract is always special and distinct; unlike a professional service contract, depending on the nature and description of allowance the athlete receives. In addition, if the contractual agreement exceeds the terms of the contract, under section 27 of the Contract Act of India, 1872, it will be void and unenforceable. These are private contracts that do not require an employer-employee relationship. “An endorsement contract gives a sponsor the license to an athlete’s name, image, or similarity in connection with the advertising of a sponsor’s products or services.”^[2]
3. Appearance Contracts: It compensates the athlete for appearing in various public works at any institution, brand, or company. An athlete can be paid to appear at a reception, a sports camp, or a tournament. “Thus, it is a contract between thevenue and the athlete. It includes a Sports camp, sports tournaments, etc. It sets out the time and dates for the appearance of an athlete at the venuelocation.”^[3]

Considerable areas in which sports contracts takes place^[4]

• “Endorsement and merchandising Contract
• Contract of Sponsorship Rights
• Contracts between Player and managers or Agency contracts.
• Deal of Membership rights in sporting clubs or organizations.
• Contract of Image rights
• The contract for appearances by players
• Contract of Participation Rights and Obligations.
• Presenter’s Contract
• Contract of sale of media rights with event managers, Broadcasters, and promoters.
• Endorsement and merchandising Contract
• Contract of Player transfer
• Contract of Brand rights.” ^[5]

Clauses covered under the Contract

1. Title: It is an essential element of any contract to examine the nature of the agreement.
2. Information Clause: The basic details come under this clause, like the name and address of the parties and the date on which the contract was made.
3. Player services Clause^[6]: The service provided by the player came under this clause.
4. Player obligations Clause: It includes the commitments of parties towards one another. It clarifies the privileges and obligations.
5. Term clause: “This clause specifies the Contract’s duration—the time of Contract from the beginning to the end date.”^[7] After the completion, the Contract terminates on its own. Though it is the party’s choice to renew it.
6. Revenue-sharing Clause: This clause discloses the information about the percentage and related details shared between the parties to the Contract, only if any company or organization is hiring the player on the promise of sharing revenue.
7. Bonus /Incentive Clause: To bring the best skill of an athlete, they are encouraged with incentives and bonuses. 
8. Arbitration Clause: This section provides that in the event of a dispute, dispute, or any claim or if a breach of contract, invalidity, or interpretation of the contract occurs in that case, the matter will be resolved by an arbitrator at the request of any parties.
9. Board, lodging, and travel expenses Clause^[8]: This clause covers the players’ meal, accommodation, and travel expenses. It should be noted that all costs mentioned above will be the responsibility of the company or organization that hires the player.
10. Choice of Forum Clause: Under this clause, a law is chosen in which the parties to the contract wish to administer, construct and enforce the agreement. Since most sports contracts involve teams from different countries, choosing a common law or authority can save teams from any other legal issues.
11. Remuneration and other benefits Clause: It states payment of the athlete for his services.
12. No-Tempering Clause:  A no-tampering clause prevents one player from attempting to attract another employee to enter into negotiations with another team while under Contract for a different party.
13. Confidentiality clause: Most contracts come with a secret clause; certain items require confidentiality between parties that agree only. “Therefore, under this clause, the parties to the agreement agree to keep the contents of the Contract and related matters confidential. This clause binds the contracting parties even after the termination of the contract.”^[9]
14. Player restrictions/Hazardous Activities Clause: Physical activities that put players’ bodies at risk, by extension, also leave the luck of their teams at risk. One of how the agreement is made to reduce the risk of injury is to use what are known as hazardous activity clauses. In short, this clause allows a team, of its own free will, to change a financial liability to a player if a player is involved in a particular activity outside of his or her sports context and is injured as a direct result. Categories of dangerous work are more prominent today than ever before and seem to be designed to prevent and punish naturally. This section of the Act is aimed at promoting accountability and ensuring unity and soundness in terms of financial responsibility.
15. Non-assignment Clause: “Sports contracts are personal services contracts, and therefore they cannot be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the otherparty.”^[10]
16. Termination Clause: It allowed the parties to the contract to abolish the sports contract. Usually, it is based on group failures, violations of any material status, warranties, or agreements that may arise. In addition, in most cases, it gets terminated because the player does not want to play the game or is unable to meet the expectations of the team. Usually, the party desiring to end the agreement must give another written notice in advance of their want.
17. Remedies Clause: “Violations of the agreement can be remedied by financial damage, restitution or performance. However, the parties sought the remedial measures promised under the clause.”^[11]
18. Moral Clause: The Moral Clause is simply an agreement that stipulates that certain actions or acts performed or performed in a player’s private life may be grounds for termination of a player’s contract. It is often used to protect the dignity and reputation of a sports organization and to enable the body to unilaterally terminate a contract when one party engages in conduct that has a negative impact on the organization. Often, these clauses expose certain violations of law or social norms, but may also limit conduct that lowers the value of the product.
19. Best Effort Clause: This clause requires parties to use their best efforts to fulfill their contractual obligations. Dedication is the clearest explanation of the stated covenant to act in good faith. In a sports league, it means to play to the best of your ability, to play in the spirit of the game, and to follow all the rules of good behavior. It ensures that once an agreement is made, the players not only appear but also compete with the highest levels of skill on display.
20. Force Majeure Clause: “Force Majeure essentially means an unforeseeable natural or human event beyond the control of the parties to a contract which renders the performance of the contract impossible.”^[12] “However, lately this clause has been invoked throughout the world in light of the pandemic. Broadcasting rights which were bid sold for about INR 10,000 crores became a subject matter of consideration under the Force Majeure clause since the pandemic almost led to the cancellation of the Indian Premier League. This would have cost the broadcaster, Star Sports, dearly since the provisions of the contract expressly protected the BCCI from any financial obligation.”^[13]
21. Non-Compete Clause: The non-competitive clauses are employment contracts and other types of agreements made to prevent employees and/or former employees from continuing the same technology or trading with the employer competition after the end of the job. Competitive phrases have become a debate as they can be considered a violation of competition rules. The BCCI, which regulates cricket in the country, enjoys a one-on-one rule. It should be noted that the BCCI is not a state tool. Sports governing bodies, such as the BCCI, often try to retain control over sport and event planning. To prevent the development of rival organizations, they have sought to imprison players by preventing them from participating in other events, due to the pain of not being included in official events, and such rules have become a major problem under competition law.
22. Transfer Clause: It has been pointed out earlier that sports contracts remain personal services and cannot be transferred from one player to another to complement the first player. A transfer phase on the other hand is required when paid sports leagues award a player a contract and assign it to the team. So it works the other way around. The regulatory authority transfers its obligation to the party ultimately purchasing the player’s services at the auction but the player must comply with the principle of personal performance. Such a transfer clause is important when the auction format is used to select a list of groups. The auctioneer/contract manager makes contracts for the player’s services and sells them as assets to the participating auctioneers. Transfer clauses may be provisions for internal team transfers.
23. Liquidated Damages Clause: Liquidated damage is those damage that is predetermined. The general clause of damages dissolved allows the parties to privately acknowledge the possible consequences of breach of contract. Although a waste clause is usually added for use before and to avoid conflicts, it can have the effect and consequences of punishment. It is very unpleasant for players, regulatory authorities, or teams to spend their time and money to recover the amount of damage, especially when playing time is fully operational. Therefore, this section of the law should be used as much as possible where possible. Damaged damage also appears to be very useful in calculating the severity of the damage in the event of a future error.
24. Termination Clause: The power to terminate a business relationship in the event of a breach of sine qua non in all contracts. Parties and contractors consider this to be the most important factor in joint ventures. There are many long-term agreements regarding team progress, stadium rental, etc. These clauses should be written carefully because of an unresolved agreement that could lead to lawful termination of an unfair court. It can serve as a guarantee of misconduct and organizational development skills.
25. 25.  Governing Law and Dispute Resolution Clause: Even after every effort has been made to minimize misunderstandings and disputes, conflicts will likely stop anyway. In this case, a dispute may be settled. This clause should set out the rules that will apply in the event of a dispute. In addition, the clause without authority will also set out a process for dispute resolution. In particular, arbitration is used as the primary means of resolving disputes as it ensures confidentiality and is considered a legal issue.
26. Loyalty Clause: The principle of the Loyal Clause is the expansion and integration of the law of faith with a non-competitive clause. It allows the employer to terminate the contract of employment if he or she supports an issue that conflicts with the employee’s preferences. Some view this category as an abuse of communication power.
27. Social Media Clause: In the modern world the value of sponsorship has been increasing even in the sports industry. It is mutually beneficial for both, the sponsors and endorsers. However, with the increasing recognition of social media’s importance, addressing an athlete’s activities on platforms like Twitter and Facebook in the context of his or her contractual obligations has become a necessity, and there is a very real risk of things going wrong for sponsors if they fail to do their due diligence.^[14] If brands wish to reduce the risks of building partnerships that could damage their reputation and income, the importance of conducting checks on social media and ensuring that contracts with water blocking are ignored.

Above are some of the clauses present in almost every sports contract; there are other clauses whose inclusion mainly depends on the nature of the sports contract, e.g. The reserve clause in baseball.

Conclusion

Sports entertainment is a growing industry with significant implications for people’s lives. The Indian Contract Act, 1872, and the Industrial Disputes Act of 1947 are not sufficient to cover all aspects of the sports business. The sports industry is at the boom and many contracts have been signed daily. So it is necessary to draft it carefully. India has a huge demand for a large frame that can regulate all sports-related activities, from registering a sports player to a team to various recommendations. Because of non-existent laws, we see unfair dismissal of athletes, sports becoming a lucrative business, and non-governmental organizations enforcing their will on athletes. The need for legislation that would promote justice and protect the true spirit of sports in India. Today, there is a great need for the introduction of sports law. Because it is the only ray of hope that can address this situation and bring justice to the industry. Therefore, in the steady growth of the Indian sports industry, a healthy balance is needed in the implementation of the agreement.

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References:

[1] Tanisha Yadav, Contracts in the Sports Industry and the Clauses Covered Under it, Enhelion Blogs (Oct. 16, 2021, 10:02 AM), https://enhelion.com/blogs/2021/01/19/contracts-in-the-sports-industry-and-the-clauses-covered-under-it/.

[2] Tanisha Yadav, Contracts in the Sports Industry and the Clauses Covered Under it, Enhelion Blogs (Oct. 16, 2021, 10:02 AM), https://enhelion.com/blogs/2021/01/19/contracts-in-the-sports-industry-and-the-clauses-covered-under-it/.

[3] Supra note 2.

[4] Farleys: Solicitors LLP, Sports Contracts and Agreements, Farleys, https://www.farleys.com/solicitors-for-you/sports-law-for-individuals/sports-contracts-and-agreements/ (last visited Oct., 18, 2021).

[5] Tanisha Yadav, Contracts in the Sports Industry and the Clauses Covered Under it, Enhelion Blogs (Oct. 16, 2021, 10:02 AM), https://enhelion.com/blogs/2021/01/19/contracts-in-the-sports-industry-and-the-clauses-covered-under-it/.

[6] Anirudh Rastogi and Vishak Ranjit, E-Sports Player Contracts: Common Clauses And Potential Legal Issues In India, IKIGAI LAW: MONDAQ (Oct. 18, 2021, 8:45AM), https://www.mondaq.com/india/gaming/955392/e-sports-player-contracts-common-clauses-and-potential-legal-issues-in-india.

[7] Supra note 5.

[8] Avinandan Chattopadhyay, Regulation and Liabilities of Parties in Sports Contract, SSRN (Oct. 18, 2021, 9:48AM), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2145520. 

[9] Supra note 5.

[10] US Legal, Drafting Suggestions for A Sports Contract, US Legal, https://sportslaw.uslegal.com/sports-agents-and-contracts/drafting-suggestions-for-a-sports-contract/ (last visited Oct., 18, 2021).

[11] Tanisha Yadav, Contracts in the Sports Industry and the Clauses Covered Under it, Enhelion Blogs (Oct. 16, 2021, 10:02 AM), https://enhelion.com/blogs/2021/01/19/contracts-in-the-sports-industry-and-the-clauses-covered-under-it/.

[12] Gary D Way, Sudden Death: League Labour Disputes, Sports licensing and Force Majeure, Vol. 7 MARQ Sports L.J. 427 (1997), https://scholarship.law.marquette.edu/sportslaw/vol7/iss2/8/. 

[13] Kamakshi S Mehlwal, Force Majeure Clause: An Act of God, INDIA LEGAL LIVE (May 16, 2020), https://www.indialegallive.com/special/force-majeure-clause-an-act-of-god/.

[14] David Winnie, Why Social Media Due Diligence is Essential to Sports Sponsorship?, LAWYER MONTHLY (Oct. 5,2021), https://www.lawyer-monthly.com/2021/10/social-media-due-diligence-sports-sponsorship/.