The advent of the transfer window and the Bosman ruling in 1995, which enabled players to agree to join a new club six months before the player’s contract with his present club is due to expire, has meant that pre-contracts between clubs and players have become increasingly common. Pre-contracts come in many different forms but generally speaking it is an agreement providing for the player to join the club on a future date.
The nature of a pre-contract can often lead to the parties misinterpreting its legal effect and disputes can arise when one party fails to honour its obligations under the pre-contract. A dispute recently arose between Scottish player, Richard Brittain, and clubs Ross County and St Johnstone. In January, Richard Brittain signed a pre-contract with St Johnstone ahead of a move to the club in the summer from Ross County. However, Richard Brittain subsequently changed his mind about the transfer for personal reasons and signed a new contract with Ross County. St Johnstone insisted that Richard Brittain was bound to the pre-contract that he had signed and threatened legal action against Richard Brittain for breach of contract.
Are pre-contracts binding?
The enforceability of a pre-contract will depend on the specific terms of the agreement. Pre-contracts are generally not binding under English law as they are usually marked “Subject to Contract” and are simply a commitment by the parties to enter into a later contract. The difference between a pre-contract and a contract is that the parties to the pre-contract have not agreed the essential terms and so the pre-contract does not reflect the final agreement. However, if a pre-contract contains all the essential terms that have been agreed, then the pre-contract is effectively a final contract and is likely to be binding.
FIFA’s Dispute Resolution Chamber (“DRC”) has had to determine on a number of occasions whether a pre-contract has binding effect when a dispute between a club and a player has arisen. The DRC has generally held that a pre-contract is binding if it contains essential terms such as the duration of the contract, remuneration and additional benefits. Another factor taken into account by the DRC is whether the pre-contract has come into effect. If the pre-contract has been terminated prior to when it is due to take effect, then the DRC has been reluctant to find that the pre-contract is binding whilst if the parties have already begun to perform their obligations under the pre-contract prior to any termination, then this is usually evidence to prove that the parties intended to be bound by the terms of the pre-contract. In an attempt to release themselves from the obligations under a pre-contract, parties have attempted to allege that the validity of a pre-contract was conditional upon a player successfully completing a medical or obtaining a work permit however the DRC has rejected all such arguments on the basis that Article 18(4) of FIFA’s Regulations on the Status and Transfer of Players 2012 prevents the validity of a contract between a player and a club being“subject to a successful medical examination and/or the grant of a work permit.”
The dispute involving Richard Brittain was ultimately resolved after Ross County agreed to pay St Johnstone compensation. In order to avoid similar disputes, clubs and players should exercise caution when entering into pre-contracts given the risk of the parties being bound by the pre-contract at an earlier stage than they intended. A breach of a pre-contract without just cause would entitle the innocent party to compensation and likely lead to sporting sanctions being imposed on the party in breach in accordance with Article 17 of FIFA’s Regulations on the Status and Transfer of Players 2012. If the parties do not intend to be bound by the terms of the pre-contract, then they should expressly state that the document is not the final contract and that its terms are not intended to be legally binding.
A club, like Ross County, that considers signing a player who has signed a pre-contract with another club should also tread carefully as the club and the player would be jointly and severally liable for any compensation payable if the player is found to have breached the pre-contract without just cause (Article 17(2) of FIFA’s Regulations on the Status and Transfer of Players 2012). Sporting sanctions can also be imposed on the club for inducing the player to breach the pre-contract as there is a presumption, unless established to the contrary, “that any club signing a professional who has terminated his contract without just cause has induced that professional to commit a breach” (Article 17(4) of FIFA’s Regulations on the Status and Transfer of Players 2012).