In the first of a series of contract law-themed articles, our online editor examines the importance of being familiar with the basic principles of offer and acceptance, as told through the lens of the recent Emiliano Sala debacle.
On 21 January 2019, Argentine footballer Emiliano Sala tragically passed away after his plane crashed while flying from Nantes to Cardiff, where he was to finalise a transfer to the Premier League side for a reported fee of €23m. The pilot flying the plane, David Ibbotson, also lost his life in the crash.
However, this tragedy has since taken on a new dimension, as Cardiff City FC are now reportedly disputing the existence of a completed contract and as such, are refusing to pay the first instalment. According to an article published in The Daily Telegraph, Sala signed a contract with Cardiff that was rejected by the Premier League as it contained a disproportionate signing on fee. Sala died before he an amended version could be put before him.
The contract was also subject to a condition which stated that both the UK and French football authorities would have to confirm that Sala had been registered as a Cardiff City player before the transfer could be deemed complete. Evidently, this condition was not satisfied. Nantes claim that they had completed all of their obligations under the contract and that Cardiff’s attempts to have the deal rendered ‘null and void’ are unlawful.
In recent weeks, it appears as though the two parties are closer to reaching a mediated agreement. As of April 2, lawyers for Cardiff have agreed to sit down with their Nantes counterparts to discuss how to proceed – with the aim of avoiding arbitration by FIFA, world football’s governing body. If Nantes refuse to meet, Cardiff are said to be prepared to continue with their argument that the transfer was void, and may even throw in a claim of vicarious negligence.
The facts of this dispute highlight just how important the principles of contract law are. They need to be malleable enough so as to respond effectively to messy, complex situations such as this one and as such, mastery of this subject is necessary for all lawyers. Let's begin with offer and acceptance.
Offer and acceptance
Cardiff are arguing that a completed contract never arose, as a precondition was not satisfied, whereas Nantes are seeking to enforce payment on the grounds that the contract has been completed. This idea is reflected by Hogan J in Tolan v Connacht Gold (2016) where he notes: ‘Before one gets into the business of construing a contract, there must be in the first place a contract to construe’.
As we know, a contract arises when two parties reach an agreement giving rise to reciprocal – though not identical – obligations which are legally enforceable. The twinned concepts of ‘offer’ and ‘acceptance’ are best described as legal terms of art which are deployed by the courts as a means of ascertaining at which point an agreement has been reached between the parties.
Clark defines an offer as a ‘clear and unambiguous statement of the terms upon which the offeror is prepared to act’. In Storer v Manchester City Council (1974), a contractual offer was defined as that which ‘empowers the person to whom it is addressed to create a contract by their acceptance’. In the present case, the offer would have arisen when Cardiff offered to pay 23m euros to release Sala from his contract with Nantes.
As per McDermott and McDermott: ‘If the response to the offer is anything less than a clear and unequivocal acceptance of the exact terms of the offer, then the response will be seen as a counter-offer.’ Moreover, counter-offers vitiate original offers, meaning that one cannot turn around after failing to accept the offer at the first time of asking and then accept it later – Hyde v Wrench (1840). A counter-offer would have arisen in the present case if perhaps there was some back-and-forth over the price of obtaining Sala's services.
Lastly, we come to acceptance which is defined as a final and unequivocal expression of agreement to the terms of an offer. It must be accompanied by intention – Parkgrange v Shandon (1991). Moreover, acceptance can be implied as per Carlill v Carbolic Smoke Ball Company (1893) or Billings v Arnott (1945). Usually, unless an agreement is in place to the contrary, silence will not constitute acceptance – Felthouse v Bindley (1802), Russell and Baird v Hoban (1922).
Acceptance could have occurred in a variety of ways in the present case. Usually, contracts of this magnitude will specify a method of acceptance. This specified method, or a more expedient method, must be used - meaning that if acceptance is specified as being by post, email will suffice but not vice versa.
On application to the Sala scenario, it appears as though both offer and acceptance occurred. The subsequent dispute seems to centre around the incorporation of a term which allegedly prevents the formation of a binding contract until the transfer has been officially sanctioned by the relevant footballing authorities. However, since there are limited facts available to us on this point, it would be best to avoid speculating as to the potential strength of either party's case.
In the opening chapter of their masterful textbook on contract law, McDermott and McDermott note: ‘The best way to avoid becoming embroiled in contract law litigation is to reach and record a clear agreement on all issues’.
The importance of this simple piece of advice can be clearly observed in the Sala debacle, whereby it seems as though the negotiating parties were at cross purposes – Nantes seemingly unaware of the term which Cardiff are now holding up as vitiating the contract. Perhaps if the terms of the contract had been clearer, this dispute could have been avoided.
For further reading, please see McDermott and McDermott, Contract Law (2nd Ed), which may be purchased here. Alternatively, an interactive copy of this textbook is available for subscribers to Irish Company Law - click here to start a free trial today.