The key clauses that every representation contract should contain
03 July 2019
With the transfer window now in full swing and intermediaries busy brokering deals on behalf of both players and clubs, it is an important time for intermediaries, as well as players and clubs, to ensure that the terms of their representation contracts sufficiently protect their interests.
A representation contract is an important document as it not only regulates the whole relationship between the intermediary and the player and/or club but a properly negotiated and drafted representation contract is also crucial in avoiding litigation, particularly in an industry where disputes are rife.
The FA’s Working with Intermediaries Regulations require all parties to enter into a validly executed written representation contract prior to that intermediary carrying out any intermediary activity and the representation contract must contain, as a minimum, all the obligatory terms of the standard representation contract published by the FA.
However, whilst it is helpful to have a readily available standard representation contract which provides some basic contractual framework, intermediaries, clubs and players should always consider inserting more detailed provisions into their representation contracts.
The standard club and player representation contract simply provides a blank box for the parties to confirm what services the intermediary is going to provide. Invariably, parties who do not seek legal advice when concluding a representation contract, provide very wide and basic information regarding the intermediary services such as “football negotiation services”.
Considering that the intermediary’s services form the whole bedrock and purpose of the representation contract, it is vitally important that these services are defined and clearly set out in full.
For example, if an intermediary is acting on behalf of a player, the representation contract should clearly stipulate that the intermediary is appointed throughout the duration of the contract to negotiate and renegotiate the player’s employment contracts.
If applicable, the service provisions should also make clear that the intermediary is appointed to negotiate and renegotiate commercial endorsements on behalf of the player such as boot sponsorships and other commercial deals.
As well as clearly defining the services which the intermediary is going to provide on behalf of a player and/or a club, the representation contract should also set out the specific obligations on the parties.
The standard representation contract contains no express obligations so for the sake of clarity it is recommended that all representation contracts include obligations on the intermediary such as:
- to act in good faith and in the best interests of the player and/or club;
- to perform the services to the best of his/her ability;
- to keep the player and/or the club informed of all material information in relation to the services;
- to comply with the FA rules and specifically the FA’s Working with Intermediaries Regulations;
- to be registered to act as an intermediary; and
- to hold valid professional liability insurance.
Obligations should also be imposed on the player and the club (if applicable). This can include:
- A warranty and undertaking that the player is free to enter into the representation contract and is not prevented from doing so by for instance an existing exclusive representation contract;
- If the representation contract is exclusive, an obligation that the player shall engage no other intermediary during the term albeit the player is entitled always to represent himself in any transaction;
- An obligation on the player and/or the club to comply with FA rules and specifically the FA’s Working with Intermediaries Regulations; and
- An agreement that the player and/or the club shall provide any information or documentation which the intermediary may require in order for him or her to perform the services.
This is just a snapshot of some of the obligations that should be included in a representation contract and is by no means an exhaustive list.
The only termination right provided for in the standard representation contract is that it shall be “terminated with immediate effect if the Intermediary’s Registration expires during the term of the Contract and the Intermediary does not renew his Registration within 14 days of being requested to do so in writing by the Player.”
Wider termination rights for either party, however, should be considered including the right to terminate in the event of:
- An intermediary’s suspension;
- A breach of the parties’ obligations. This is usually restricted to only material breaches and a distinction between material breaches capable of being remedied and those which are not; and/or
If any rights or obligations are intended to survive post-termination, then this should be made expressly clear.
Remuneration provisions are a key part of the representation contract especially as the transactions usually involve liabilities for significant sums of money.
The standard player representation contract simply provides for the commission percentage and confirmation on whether it is payable in a lump sum at the start of the playing contract or annual payments at the end of each contractual year.
However, from our experience, the remuneration provisions require much more detail including:
- Confirmation of the commission payable in relation to the provision of commercial services;
- The specific dates on which an intermediary’s commission is payable;
- Whether any element of the intermediary’s commission is conditional e.g. on appearances or trophies;
- Is the club going to discharge the player’s liability by paying the intermediary’s fees directly as a benefit in kind;
- Who is going to be responsible for paying the expenses incurred by the intermediary in connection with the services;
- Are any payments still due following expiry or termination of the representation contract; and
- In the case of minors, whether the intermediary will be entitled to receive any remuneration after the player has attained the age of 18.
Boilerplate clauses can sometimes be overlooked by parties when negotiating any contract however certain boilerplate clauses are particularly important in relation to representation contracts.
In an industry which is heavily regulated and where disputes are commonplace, it is sensible to include a severance clause in the representation contract in an attempt to avoid the possibility of the entire representation contract being unenforceable if certain clauses are invalid.
Prior to any representation contract being entered into, it is common for there to be a number of meetings, negotiations and conversations between the parties and so the inclusion of an entire agreement clause is recommended in order to avoid the possibility of pre-contractual statements forming part of the contract or the formation of a collateral contract being argued for. The inclusion of a non-reliance/exclusion clause should also be considered in order to limit any liability for misrepresentation.
Finally, the parties to a representation contract will invariably have access to sensitive and confidential information and so it is always advisable to include obligations on the parties to keep the terms of the representation contract and any other sensitive information confidential.
Representation contracts are vitally important and whilst there can be a tendency in the industry to disregard their importance by simply using the very basic standard representation contract in order to comply with the regulations, intermediaries, players and clubs should always obtain legal advice prior to entering into a representation contract to ensure that their position is fully protected.