Some Basics on Contracts

Published September 5, 1996

Sport associations are using contracts more and more frequently, not only in business affairs but also in areas of employment and programming. For example, coaches sign employment contracts; athletes sign participation contracts with the sport association as well as with major Games organizations; organizations, suppliers and athletes sign sponsorship agreements; and participants in recreational sport sign waivers (a form of contract). These contracts cover everything from conduct and discipline to selection processes and money issues.

Often parties don't pay a great deal of attention to the content of the agreements they enter into. However, they do this at their own peril. A contract is a legally binding agreement, and the parties will be bound to the content of such agreements. Furthermore, in a number of recent court cases involving disputes over selection to the 1996 Olympic team, our courts sent a clear message to the sport community about the seriousness of contracts. They said that, in the absence of compelling evidence of unfairness, they are not prepared to interfere with a contract.

In other words, the courts are not prepared to write in to the contract terms which may not have been included, or to change terms already in the contract. In one sport case, the Manitoba court said "Apart from a claim of rectification [1], I know of no basis upon which a court can rewrite a contract by inserting a fresh clause in an agreement, no matter how desirable it might be" (McCaig et al. v. The Canadian Yachting Association et al.). This case related to how a selection process, described in a contract, was carried out.

A proper contract is one which sets out the parties' clear and mutual understanding regarding a certain issue or subject. The purpose of the contract is to make clear the rights and obligations of both parties, that is, what each party must do to fulfill the contract, and what each party is entitled to in return. If the terms of the contract are not written clearly, are open to ambiguity, or are incomplete, disputes can arise - and often do.

There are certain situations in which a contract may be declared partly or wholly invalid. These situations are often the result of errors or problems in the execution of the contract, the result of some unclear phrasing or part of the contract, or the result of the nature of the relationship between the parties to the contract. For example, a contract that is against public policy will be set aside. Such contracts include those involving minors, where the contract is clearly not to the minor's benefit. Public policy arguments have also been used by those challenging waivers of liability as a prerequisite to participating in a sport activity. In general, the case law is clear that where an individual's participation in an activity is voluntary, a public policy argument to defeat a contract will likely not succeed.

A contract might also be challenged if one party exercised undue influence over the other party in the negotiation and execution of the contract. This situation may occur in sport as athletes are often in an unequal bargaining position relative to the sport association. To date, there hasn't been a challenge to a contract on this basis, but nor has there been a concerted effort on the part of athletes to be involved in the bargaining process. This may change as athletes become more organized through organizations such as AthletesCAN.

The courts have also made it clear that the time to raise concerns with a contract is prior to its execution, not after the contract has already run its course and the adverse outcome has become apparent. In the case of Kulesza v. Canadian Amateur Synchronized Swimming Association Inc. (1996), an athlete argued that the selection process outlined in the athlete contract was flawed. The Ontario court responded, "The applicant should have complained about her perceived bias at the time she was invited to agree to the terms of the selection and appeal process". As it was, the complaint came some 11 months later when the applicant found she had been selected as an alternate. The court went on the say that even if it found the process to be flawed (which it had not), the applicant had nonetheless "waived her right to object to the process, by her written agreement and her conduct [in delaying her complaint to the court]".

A word of advice to those about to enter into contracts: sort out any concerns before the contract is to be signed. If you feel you have no bargaining clout, and at times you do not, at least make it formally known that you have some reservations about certain terms of the contract. Without this, you are in no position to complain later on.

As well, brainstorm about the possible outcomes that could unfold under the terms of the contract, and make sure the contract provides guidance on how these situations will be dealt with. For example, if you are entering into a contract for coaching services and your contract includes provisions about how your performance will be evaluated, make sure you are entirely comfortable with the evaluation process and have a clear view how it will proceed. The time to argue about an unfair evaluation process is at the time of negotiating the contract - not after the evaluation has occurred.

Watch for the upcoming coaches handbook on employment contracts, being prepared by the Centre for Sport and Law and the CPCA. This handbook will cover the legal principles of contracts, and will also show coaches how to maximize their negotiating position when embarking on a contract for employment.

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[1] "Rectification" refers to the correction of an obvious error which changes the intent of a contract clause, for example, a typographical error or an obviously wrong date.

Originally published: Coaches Report (1996) Vol. 3(2)