10 August, 2021
Over the past fortnight, the transfer sagas of two footballers from their respective clubs to Manchester City have outlined the importance of a written contract. On the one hand, we have the completed £100 million transfer of Jack Grealish from Aston Villa to City; on the other the frustrated position of Tottenham Hotspur's Harry Kane.
Both players had attempted to instigate transfers based on the same premise; namely that if a club of a certain standing were to place a bid over a specific value for them, their current club would be obligated to facilitate the transfer. However, the fundamental difference between the two players is that in Grealish's case this was an express term in his current contract, whereas, for Kane, there was an alleged undocumented 'understanding' or 'Gentleman's Agreement' in place between the parties.
Villa and Grealish (via his agent) had negotiated a particular provision in his contract. This included a particular clause which stated that if a bid of £100 million was received from a club taking part in the UEFA Champions League and Villa was not taking part in the UCL then a release option (i.e. the transfer) could be triggered by the player. As such, when the bid was lodged by City the interests and positions of the parties had already been established. With the criteria met, the transfer was negotiated and resultantly City's new number 10 made his debut for the club in the Community Shield.
By contrast, in June 2021 City tabled a bid of £100 million for the England captain. This was subsequently rejected by Spurs. Kane believed that he had an agreement with his club that in the event of a bid being lodged, he would be entitled to trigger a release option. Alas, for Kane this was not the case. Unlike Grealish, he had not negotiated such provision to be included within his current contract nor was the alleged 'understanding' recorded or signed. While it has been widely reported that Kane had attempted to push through the transfer by failing to train with the London club, Kane has subsequently returned to his current employers to prepare for the upcoming season.
What potentially complicates that matter, is that English contract law can apply to verbal agreements. As such, in Kane's situation, the 'understanding' could in fact be binding. However, for such to be deemed a valid contract a four-tier test must be satisfied. Namely that:
With regard to Kane's situation, it is apparent that his argument falls at the first hurdle. It takes two parties to come to an agreement. Spurs, unlike Villa, did not allow for a release mechanism within Kane's playing contract. Additionally, Kane, the current England captain, is undoubtedly Spurs' most prominent player and the club's own valuation of the player potentially exceeds the value of City's bid. For these reasons it is unlikely that Spurs, having rejected the initial bid, would confirm that the 'understanding' was in place nor is it likely to agree to the sale of a player on 'third parties' terms.
The proposed movement of two footballers has given the business world a great insight into the need to record contractual relations between parties.
A contract defines the legal relationship between parties and even in the most basic form, a contract will provide the ultimate understanding of the respective obligations and the price that will be paid for the goods and/or services. While many contracts are signed and never considered again, a documented contract becomes of the utmost importance when the relationship between the parties becomes fractured. Where the basis for the relationship between the parties is word of mouth the inability to revert to a documented agreement can present an issue resulting in both parties becoming frustrated.
Had Kane, for example, negotiated a clause like Grealish's in his current contract or entered into a formal side agreement with his club which would have enabled a release mechanism, he would almost certainly be running out in City's sky blue rather than the white of Spurs this season.
The Commercial department at Forbes Solicitors can assist you in avoiding any contractual pitfalls. If you have any questions regarding the status of a contract or require assistance with drafting an agreement please contact John Pickervance in our Commercial department via email at John Pickervance or phone on 0333 207 1134.