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Contracts and sport organisations

Administrators of sport organisations, voluntary and paid, need to have some understanding of the law regard contracts. The most common contracts to be entered into by sport organisations are:

• employment contracts
• player contracts
• coach contracts
• contracts to lease facilities
• sponsorship contracts
• loan contracts

What is a contract?

A contract is formed when one party (the promisor) makes a promise to another party which the law will enforce because certain conditions, as described below, have been met. The party to whom the promise is made is called the promisee.

When parties enter into a contract, they do not necessarily have to put their agreement in writing for the contract to be enforceable in law. However, if the agreement is not in writing, it is much harder to prove that promises were made unless witnesses can substantiate. When a contract is put in writing it is must be signed ("executed") by both parties.

There are three broad categories of written contract:

• Simple written contracts
• Deeds
• Negotiable instruments

Simple written contracts

A "simple" contract is the usual form of everyday contract that people make. A simple contract can be made verbally or put in writing. A simple contract must contain a number of essential elements for it to be enforceable in a court of law:

• An agreement between parties (i.e. offer by one party, acceptance by the other)
• Consideration - parties to the contract exchange something of value (i.e. a car is exchanged in return for money)
• Intention by both parties that the agreement be legally binding
• Capacity - both parties are of legal age to enter into an agreement and are of sound mind (children are not deemed to have capacity to form legally binding agreements)
• Certainty of terms - a rule that all requirements and stipulations for the performance of the contract are known to contracting parties before the agreement is struck (the contract is signed)
• The contract should be free of duress, misrepresentations or illegality

See also the special case of Unilateral Contracts which may occur sometimes in sporting situations.

Deeds

A deed is a special form of contract in which only one party has obligations. This is not the case in a normal simple contract. A deed is used, for example, to transfer ownership of something (often property such real estate) to another person or legal entity. A deed might also be used in cases where one party wants to commit to legally binding obligations to another. In all cases, a very important difference between a deed and a simple contract, is that no consideration is required by the person or entity receiving the real estate or other benefit and rights.

A deed must:

• Say, on the face of it, that it is a DEED; and
• Be validly executed (signed) by the person making it or the parties to it.
• Signed and attested by at least one witness who is not a party involved

Negotiable instruments

A negotiable instrument is an instrument of credit that has features of negotiability. Negotiable instrument means promissory notes, bills of exchange or cheque, payable either to order or bearer.

A negotiable instrument is an unconditional promise to pay a certain sum of money. The money should be made payable on demand.