1. chapter
5
Contract Law

2. Chapter Objectives
After reading this chapter, you will know the
following:
• The elements of a valid contract
• Common provisions within sport contracts
• The many types of contracts that are found
in the sport industry
• The issues that arise when a sport contract
is breached

3. Elements of a Contract
• Offer
• Acceptance
• Consideration
• Legality
• Capacity

4. Offer
• Made by offeror
• Creates power of acceptance
• May provide the way that another party can
accept the offer

5. Acceptance
• Acceptance by the offeree or agent (not
third party)
• Must be in positive manner through words
or conduct
– Not changing terms
– Recall counteroffer
• Communication to the offeror
– Not silence
– Bilateral contracts (promise for a promise)

6. Consideration
• Each party must provide consideration
• Must be some value or benefit given or given
up by each party
• Cannot be a gift, past performance, or illegal
acts

7. Examples of Consideration
• Money for the promise to provide a meal
• Money for the promise to provide use of an arena
• Promise by a restaurant to host a Halloween party
in exchange for having the restaurant decorated for
Halloween (decorating products and services)
• An act or promise not to act (forbearance)
– Promise to pay a salary for the work (acts) of an employee
– Promise to release a worker from an employment contract if
she agrees to not open a business in the same geographic
area for a certain time (forbearance)

8. Legality and Capacity
• Legality: Even with offer, acceptance and
consideration will be a contract only if it
covers something legal.
• Capacity: Those mentally incompetent,
minors cannot enter into valid contracts.

9. Typical Provisions
• Party designations
• Term: Length
• Warranties and representations: Promises
in the contract
• Obligations and duties
• Termination

10. College Contracts
• Student-athletes: Contracts with the
university
– National letter of intent
– Scholarship

11. Employment Contracts: Athletes
• League collective bargaining agreement
– Contract between players (union) and owners
(league)
– Uniform Players Contract: Standard contract for all
professional athletes in a league
• Endorsement contract
• Athlete agent representation agreement

12. Employment Contracts: Coaches
• College and professional: Both incredibly
high salaries
• Benefits
• Termination

13. Game and Event Contracts
• Game contracts: For game or contest itself
• Event contracts: Hosting overall event that
may surround a game

14. Waivers and Releases
• Form of contract
– Signed before event
– Participant absolves organization from liability for
injuries suffered at the event
• Use
– Club sports
– Health and fitness
• Invalid if signed by minor

15. Lease
Agreement between facility owner and team or
sport organization
– Offer: Promise to play at facility (team)
– Acceptance: Funding and maintenance of facility
(city or district)
– Consideration: Rent or payments (team),
maintenance and revenues from use (city or district)

16. Contract Law Issues
• Parole evidence rule
• Statute of frauds

17. Remedies
• Damages
– Compensatory
– Consequential
– Liquidated
• Specific performance
• Duty to mitigate

18. Alternative Dispute Resolution (ADR)
• Arbitration: Final and binding
• Mediation: Up to the parties to agree

19. Capacity
• If a minor enters a contract, contract is voidable:
– Minor can ratify (make contract valid)
– Minor can disaffirm
– Adult under contract has no choice
– Exception is disaffirmance: Words or conduct to show intent
not to be bound by the contract; restitution
– When age is misrepresented: “Shield, not a sword”
• Intoxication: Voidable?
• Mentally incompetent: Void, voidable, or valid?

20. Remedies
• Suit for specific performance
– Force defendant to perform specific contract terms (e.g.,
franchise agreement)
– Refrain from engaging in activity prohibited by contract
• Liquidated damages
– Liquidate means to pay a debt
– Monetary penalty stated in the contract
• Economic loss
– Loss of reputation (good will)
– Actual costs due to breach of contract

21. Management Perspective
on Contracts
• Get it in writing.
• Read the contract thoroughly.
• Keep copies of all contract documents.
• Use good faith when negotiating contracts.
• Note deadlines for performance.
• Ensure the performance of third parties.
• Share contract information with those who need to
know, and educate staff on the consequences of
contract breach.
• Resolve ambiguities as quickly and fairly as possible.