The world of professional sport is highly competitive. It is common for athletes to move from team to team in their chosen sport. However, sometimes an athlete choosing to move from one team to another may be as a result of temptation from another team to break their existing contract in favour of something newer and perhaps more attractive or lucrative.
The temptation, or inducement as it is often referred to, can carry a risk of serious allegations and claims being made against various parties involved, particularly where the loss is deemed to have been suffered by the existing team.
The basics: what does it mean to induce a breach of contract?
Inducing a breach of contract is where a third party knowingly and intentionally induces a party to a contract to breach a contract that the individual has with another party. For example, a third party inducing an athlete to breach the contract they hold with a team.
A breach of this type need not necessarily be in the form of an athlete terminating their contract with the team early, but can also apply where they are induced to breach any restraint clauses that may be set out in their contract.
Who can a team make a claim against for inducing a breach of contract?
A team will usually make a claim of inducement for a breach of contract against the individual(s) responsible for seeking out and negotiating with the athlete. This can include managers of the athlete or the team seeking out the athlete.
What loss or damage can be suffered as a result of inducing a breach of contract?
Loss or damage can come in many forms, however the most common in sport is the loss of sponsorship or other financial backing associated with the athlete being part of the team.
Steps that can be taken
When a team becomes aware of one of their athletes being induced by another party, it may be able to apply for and be granted an injunction, including against the third party so that the inducement conduct ceases.
However, where despite the terms of their contract, the athlete has left the original team, the team may not only be able to take action against the athlete for breaching the contract, but they may also be able to make a claim against any third party involved in the conduct for the losses it has suffered.
To be successful in bringing a claim for a breach of contract by inducement the team would need to prove:
- there was a contract between the team and the athlete;
- the third party knew the contract existed, and that if the athlete took a particular action (or failed to take a particular action), that would be a breach of their contract. Deliberate ignorance or failing to make appropriate enquiries dos not necessarily absolve a party from responsibility for the outcomes of their conduct;
- the third party must have also intended to induce the athlete to breach the contract by taking (or failing to take) a particular action; and
- the breach of contract has caused loss or damage to the team.
Our tips for athletes and third parties to avoid inducement of breach of contract
Permission and information:
- if you’re an athlete and you’re considering terminating you contract early for any reason, it is important you review the terms of your contract and speak to the team to see whether moving to another team is possible, and if the team will waive any restraint clauses that may apply.
- if you’re a third party seeking out an athlete from another team, it is always best to ensure that you clearly understand and take reasonable steps to inform yourself as to the contractual position of the athlete.
Seek legal advice:
- if you’re an athlete, it is always best to ensure that you fully understand the contracts sign so that you are clear on your rights and obligations you owe to the team. You should always seek advice prior to entering a contract, and if for any reason you wish to terminate early, seek further legal advice as to how best to manage this termination.
- if you’re a manager of an athlete, it’s always best to seek legal advice as to whether your role in the athlete changing teams could be at risk of a claim being brought against you by a team.
- if you’re a third party seeking an athlete from another team, if there is any uncertainty as to whether there are restrictions or likely to be any liability for inducing an athlete to breach their contract, be sure to seek legal advice to understand the risks.
Importantly, whilst we have used the example of athletes and teams above, if you induce a party to breach any contract, it may lead to the other contracting party taking action against you.
If you would like further information or advice in relation to a breach of contract, the KKI Commercial Team can help.