Rupert Beloff considers whether contractual terms restricting players from participating in their chosen sport are enforceable at law.
A term in a player’s contract, a rule imposed by a sports federation, which places restrictions on his or her ability to participate in their sport may well be unenforceable as an unlawful restraint of trade. For example in the case of Grieg v Insole [1978] 1 WLR 302 the court held that rules placing a restriction on playing in rival test series were unenforceable as an unreasonable restraint of trade.
Every contract of employment in the sporting context may of course be considered a restraint of trade as the player by contracting with one party is usually restricting him or herself form contracting inconsistently with others. Traditionally in determining whether the restraint was unreasonable and unlawful the courts drew a distinction between restrictions during the currency of the contract, which were not held to be unlawful, and those post-termination which were.
More recently there has been a move away from this simple distinction. Watson v Praeger [1991] 1 WLR 726 concerned a contract between a boxer and his manager. It was in a form prescribed by the British Boxing Board of Control. The contract had a term of three years but was extendable for a further three years at the option of the manager. When the manager attempted to exercise this option but the boxer argued that the contract was unenforceable as a restraint of trade. Scott J agreed on the grounds that the contract was not the result of free negotiation by the parties but had been proscribed by the governing body. He further considered that this restraint of trade could not be justified on the basis of the interests of the parties and the public.
In contrast when Kevin Keegan resigned as the manager of Newcastle United in 2008 he made a successful claim for constructive wrongful dismissal. A term of his contract prohibited him from working for any other Premier League Club for a period of six months. The Premier League Manager’s Arbitration Tribunal considered that this term was reasonable and not an unlawful restraint of trade. In reaching this decision it considered that the key factors were the relatively limited term of the prohibition and its limited scope. Keegan was not prevented from working for clubs outside of the Premier League or in other countries.
Therefore whether the restraint of trade takes place in the currency of the contract or not is now less important than a consideration of whether it is oppressive or unreasonable.
The courts have shown a willingness to use the doctrine of restraint of trade in contracts of long duration where it considers the restrictions to be unnecessary or oppressive. In Instone v Schroeder Music Publishing Ltd [1974] 1 WLR 1308 , a case concerning a recording contract rather than a sporting one, the House of Lords found that a ten year exclusive contract was an unreasonable restraint of trade. Lord Reid stated:
“Any contract by which a person engages to give his exclusive services to another for a period necessarily involves extensive restriction during that period of the common law right to exercise any lawful activity he chooses in such manner as he thinks best. Normally the doctrine of restraint of trade has no application to such restrictions: they require no justification. But if contractual restrictions appear to be unnecessary or to be reasonably capable of enforcement in an oppressive manner, then they must be justified before they can be enforced.”
There can be little doubt that the courts would apply similar scrutiny to sports contracts.
Rupert Beloff
Rupert Beloff, a member of No5’s Employment, Sports and Commercial Groups, is a co-author of Sports Law by Beloff, Kerr and Demetriou (2nd Edition) which will be published by Hart Publishing in October 2012.