Honoring Contracts
 

With the recent Terrell Owens contract soap opera and its aftermath, and many years of similar contract disagreements, I've read a lot of opinions about teams honoring contracts as well as players honoring contracts. Some ask why should a player honor a contract when teams so often don't? Well I find a glaring problem with that thought process. When a player signs an NFL contract, he knows certain things inherent with that contract that both he and his agent agree to upon signing. Basically the contract states that,

A) The team will pay you X dollars, if you make their roster.

B) If you do not make the roster, you will not be paid the contract amount, and you are free to negotiate with any team you desire to.

C) The team has the right to terminate the contract anytime they want by simply releasing you. You are then free to negotiate with any other team in the NFL for your services.

D) We have rights to your services for the duration of the contract that you agree to and sign.

The player then either agrees to the contract, and its duration and signs it, or continues to negotiate. Often guaranteed money, or a signing bonus are included in the contract, which is irrelevant to honoring a contract, since it is money due that player regardless of the situation.

Nowhere does a contract state that the player has a right not to honor the contract if he feels he is under-paid. That right is forfeited, with the consent of the player and agent, the moment he signs that contract. That is why many players and agents will back-load a contract. It gives the player the long-term advantage. If the team still wants him, they must pay the back-loaded amount. If the team doesn't want him at that price, the team has the right (agreed to by both player and agent) to terminate the contract and allow that player to negotiate with any team they so desire.

So as far as honoring a contract, it basically comes down to two primary obligations,
1. The team is obligated to pay the player the agreed amount, or release them and allow them to pursue appropriate compensation elsewhere.
2. The player is obligated to play for the agreed amount, or decide not to honor the contract, not play, and not get paid any of the contract amount.

I have yet to see a team not honor a contract, but I've seen many players not honor theirs.

Interesting take. Let me say, the specific contract a player signs may not say a player doesn't have to honor a contract if he feels under-paid, but the collective bargaining agreement allows for either side to "come back to the table" so to say when there is a contract issues. It also provides a players right to hold out in this instance as well. Without these rights provided in the CBA, a player would be screwed. The team has the right to fine a player should he choose this option, but it is still the player's option to do so. The team could release the player and allow him to gain his worth ont he free market, but they KNOW other teams would pay a Javon Walker or a TO what they were asking, thus weakening the original team and possibly strengthening a rival, so teams let them sit out instead of paying them more.

In some cases, as in Javon Walker's, a player obviously outplays a contract, and chooses a hold out to remedy this situation. It's well within his right. Just like a player could choose not to, ala Deuce.

I also see a problem with the idea of a back-loaded contract favoring the player. It doesn't, and this is the exact reason TO is holding out. He wants the back end money of his contract moved forward, he doesn't even want a new contract. Back loading contracts favors the team, as the Saints did with Joe Horn's new deal, in that when a player reaches that portion of his contract, it's pay or cut time. Look at Aaron Brooks' contract. He is due buttloads of money starting next year. Think he will see it? Who does that favor? The Saints. If Aaron wants that money, he has to play his butt off to get it, which helps the team, or his salary is cut, which helps the team. When a player plays to the level of that contraqct, then yes it is good for them. But if they don't, the team benefits by either cutting them or renegotiating that deal with them.

These two statements are in direct conflict with one another. If you want to see a team not honoring a contract, just see Tebucky Jones and Orlando Ruff. When a team releases a player who is under contract, they are not honoring that contract. Just like when a player holds out for a new deal, he is not honoring his contract. They both happen. Teams cut players under contract all the time, that means they are not going to honor they contract they signed at the same time the player did. I am confused by these conflicting statements.

I disagree. If the contract states that the team may release him at any point, and they chose to do so, how is that "dishonoring" the contract?

Come on Danno, that's semantics. How do you know a contract says a player can be released at any point? That's provided for in the CBA, so why would it need to be reiterated in a player's contract? I would have to see this wording in an NFL contract cause I am not sure it exists. It is already provided in the CBA, of which every player is made aware by his agent, and during the rookie symposium. Seems like an unnecessary redundancy. If you have a reference to where I could look at an NFL contract and see this wording, then I can see where you are coming from in regards to teams always honoring contracts, though I would still not necessarily agree. If not, then because that wording is in the CBA, you would have to operate under the conclusion it would not be necessary to add it to a contract, which is reviewed by the NFL anyway before it is accepted.

Huh?
I've never heard of any NFL team not honoring a contract. Are you saying some teams don't have a right to release a player? Yes there are guaranteed contracts and teams are forced to pay that, so thats not even in the equation.
You're missing the entire point of the post.

Whoa dude. What are you reading? Where did I say anything about guaranteed contract? The NFL doesn't have guaranteed contracts. Bonuses in a contract can be guaranteed, but not the contract itself. But still, where did you see that in what I said? The word guarantee is not anywhere in my post, at all. What gives? I asked if you have seen an NFL contract to know this wording about releasing players is in there. I also said I doubted it would be as it is provided for in the CBA, meaning EVERY team can release ANY player whenever they feel like(except when they are on IR I believe). I don't see how I missed the point at all. I challenged a theory you were operating on as the crux of your argument, unless the final statement of the original post was for dramatic effect more than to drive home your point. Show me where I ca get my hands on an NFL contract, or tell me where you have seen one so I can see it too, then I can see that wording for myself. But as I said in the last post, it's already in the CBA, which governs ALL owners and players, so there is no need for it to be repeated in a contract. I hope I am clearer, cause I have no idea where your response was going.

That is the meaning of my whole post. If they are allowed to release a player at any time, then how is that dishonoring a contract?

Why do I feel like I'm arguing with someone who agrees with me?

LOL...

Wait a minute Danno. We are not agreeing. You said teams can release players cause it is in their contract. I DO NOT agree with that. It is in the CBA that teams can release players at their discretion. So if you think that's is okay, then you must also think it is okay for a player to hold out, which is also allowed by the CBA. So then your post has no point at all really. Teams and players are both protected by the CBA in their actions when it comes to a contract. So no we DO NOT agree, and teams most certainly break contracts more often than players. Please, take the time to read what I am saying, and not just what you select to read to agree with you. All you have to do is read back a post or two and you can tell you did not read what I said at all, with that guaranteed contract response. That's all I ask. Just read, and if you don't understand, ask me to explain so there are no more misunderstandings.

OK, you win, you may go back and where I have "contract" you may replace with "contract/CBA". It still makes my point either way.

Your thinking is flawed Danno ole boy, in a few ways.

First, you say that a player enters the negotiations with any team knowing that the team reserves the right to release him, and therefore he should factor that in to his asking price, and then honor the agreement in full. However, the team, as a matter of pragmatism and experience, knows that if the player's performance improves significantly, he will negotiate for more money. The team also may never intend to pay the full contract amount (i.e. Joe Horn) by cutting the player before the payments escalate. As a matter of contract law, misrepresenting your intentions to secure a deal constitutes a breach of contract. Just play out your scenrio from the players perspective:

Joe Horn is a Pro Bowl WR. He wants to be paid like one. He bargains with the Saints to receive a $42 million contract that also helps the Saints cap situation in the short-term. Horn intends to perform as specified under the contract for 6 years. Horn returns to the Pro Bowl in 2005, 2006, and 2007. After the 2007 season, Horn's salary under the contract is scheduled to increase significantly. Despite having fulfilled his part of the deal fully, the team cuts Joe simply b/c the deal that they agreed to before no longer seems worthwhile to them.

In the real world, there are provisions against that very type of action. Generally, you cannot terminate a contract after receiving substantial performance without having performed equitably ("equally") on your end. (for more info look up the Uniform Commercial Code, Restatements (Second) of Contracts, or other information on requirements contracts).


Moreover, the idea of renegotiating due to changing business conditions/requirements is inherent in the laws governing commercial transactions (again see the Uniform Commercial Code). The law of contracts is largely one of commercial equity. Where the underlying instrument or service (here the player's performance) changes during the life of the contract, the parties are normally free to modify their agreement, and in some cases, they're even required to do so.


Finally, and maybe most importantly, most people misconstrue NFL contracts to be "commercial" agreements, when, in fact, they aren't. They are labor agreements. Simply b/c the numbers are bigger does not mean that the contract changes. Viewing them in this way, it's easy to see why players can and should hold out (as a last resort IMO). Just because the contract contains a time term does not change the fact that it is an agreement to work for the organization. In that sense, other than the salary components, Horn's contract with the Saints is essentially like yours with your employer. Generally, you are an at-will employee and your employer reserves the right to fire you at any time. However, you likewise generally reserve the right to quit on a dime, get up and walk out of your office, and if they need you, then they'll have to pay you to come back. Just b/c a player demands more money, and does so in the media, doesn't change the underlying legal principles that relate to these types of contracts.

The idea that a player has an employment contract, or even a contract to provide services, and he therefore should have to honor it fully while the team reserves the right to cancel at any time simply isn't grounded in any legal theory that I know of.

No, its not.

That is 100% correct, and the entire basis of my post, end of story.

So you aren't discussing A) what it means for a player to honor and NFL contract, or B) whether they should? Somehow I doubt that. You're a smart guy, and it's not worth posting that teams reserve the right to release player.... hey, the sky is blue too. What's your point Danno? It seemed to me that you were saying that players should honor their contracts, no?

Let me start by saying, WhoDat, I think you have a wonderful grasp of contract law. Much moreso than I think I have. I never really cared for it so that may be the reason. That being said, I'd like to bring out a couple of issues.

First you said,In Louisiana, the way I understand employment law is that a person without a contract to work for someone is an employee-at-will. Anyone who has no obligation to work for their employer but can quit at any time with or without cause is an employee-at-will. An employer that has no obligation to retain an employee and may terminate him with or without cause is an employer-at-will. In order to change this, the parties need a device which will obligate the employee to work for employers on specific terms and the employers to employ the employees on specific terms. That device is a contract.

Both parties are bound to the contract until the contract's termination date, cause exists to terminate, or by provision of the contract otherwise. For example, if I hire someone who has a specific skill set and I sign them to a one-year contract, they are obligated to me for that year. In turn, I am obligated to them. If the employee quits without cause, I have a remedy in a court of law for breach of contract. If I refuse to continue to employ the employee without cause, the employee has a similar remedy. Most of the time the remedy when the employee quits will not be specific performance (meaning the employee wont be forced to work for me), but will be monetary damages or that person will be excluded from the specific area of work (typically handled in no-competition clauses).

Now applying this to an NFL contract is difficult because I don't have an NFL contract in front of me nor have I read the CBA. However, I think it works like so.

Following simple contract law, the Player is obligated by the contract and cannot simply quit without cause and move to another team. The player can retire, but that is most likely handled by a provision in the contract (the player is still excluded from playing for another team).

The team, however, either has an out listed as a provision in the contract that allows them to release a player or the contract likely refers to a provision of the CBA which allows the same at no penalty to the team (excluding salary cap ramifications).

It is possible that the contract further refers to the CBA which may state that the player may hold out for more money in certain circumstances. Thus, the player would not be in breach of contract if he did so.

I would say that there isn't a legal theory that allows for such, BUT if that is the type of contract the player signed, he probably would be obligated to such. Of course, unfair bargaining position and other issues may come into play if that were true.

ouch

Scotty - I bow to you. :)

Of course, I also have a few thoughts... who'd have guessed.

Your analysis is lucid and on-point. I would simply suggest a couple of things. First, you are correct that contracts for work which do not contain specific time terms are more commonly deemed "at-will" employment, whereas contracts containing time terms are less likely to be classified that way. However, as I understand it, and keeping in mind that Louisiana is always the exception, generally speaking, at common-law a time term only allows for reliance damages upon breach, and limits the period in which the agreement will remain in place (i.e. at the end of the term the employee has no expectation of continued work).

You are also correct that specific performance is virtually never employed in labor disputes - and rightly so. In that case, if Joe Horn, for example, were to hold out the Saints could sign another WR ("cover") and then seek damages amounting to the difference between the cost of the new WR and the cost of Horn. Realistically, this means that the team has no rememdy, b/c it is required to find the cheapest alternative under both the UCC and Restatements. While the team might argue that a "suitable alternative" is another Pro Bowl WR, there are most likely no performance guarantees in Horn's contract. Therefore, Horn would argue that an "NFL-caliber" WR is an equivalent, and the Saints should not be able to recover above and beyond costs associated with the salary of an "average" WR. IMO, he'd probably win on that.

As for your comments on non-compete clauses, you're right, but the non-compete is a function of the Collective Bargaining Agreement (CBA), and not a player's contract. I have no doubt that every player's contract has a non-compete clause, however every one is most likely unenforceable without the CBA. Non-compete clauses are oft overturned by courts on grounds of "public policy." They are subject to weighing tests that consider both party's interests, and factors such as geographic area covered, time frame, specificity of the non-compete function, and available alternatives. Seeing as how a non-compete in an NFL contract is essentially a restriction on trade for an NFL player, a court would never enforce it IMO. Which is where the CBA comes in, and solves this problem.

To me, a player holding out is tantamount to a labor strike that requires an organization to rework an existing labor agreement. I don't see anything wrong in it. Again, contract law is largely one of "fairness" and given the cavalier way that teams drop players like a bad habit, I see nothing wrong with a player who has exceeded expectations asking to be compensated accordingly. For many of them, their entire career earnings potential is reduced from a normal 50 years to more like 5 or 10, and it can end at any moment. NFL players are right to try to get what they can - just like teams are right to try to underpay and get the best value out there. Ultimately, things SHOULD balance out so that a player is paid based on his performance on the field.

I don't have a problem with a player getting paid for there work according to there performance. The only fair way to do this would be setting it up that the league would run this. If you are the top rb in the league you get xx% of the pot -excluding Ricky Williams who would thing that word ment something else.
Being ranked on your performance league wide not team wise. Your status with the team is one thing but being the 10 best QB in the league and 1 on your team could mean a couple of million.

Agreed. If the CBA allows for both, which it does, and which WhoDat so correctly referred to as what would be a labor strike in the "normal" business world, neither side is wrong in this issue outside of the court of public opinion. And let's not forget trades. A player can be drafted by a city, build a home and a future there, and get traded ala Willie Roaf, no matter performance, for other reasons. Seems fair to me that if a player is performing at a high level, or at least higher than his salary is payign him as judged by what his peers make, that he would want to get the most for his window, which WhoDat put at 5-10 years, but I think the actual number on average is more like 4-6 years. I always site a Javon Walker in a case like this. It can't be denied he has far exceeded his rookie contract by becoming a better receiver in every season despite being the number 3 receiver most games, and making the pro bowl this year. How can he be begrduged the right to go for more money? His value to the team at this point is more than what they are paying him. The CBA allows a means for him to remedy this, and he is using obviously the most extreme method, holding out. Noone will deny Deuce has outplayed his rookie contract, but he has chosen not to hold out since the team apparently IS working on a new deal for him anyway. But it would have been his right to do so.

Let's also look at another possible outcome, injury. We can compare a player to a normal job if we like, but I don't risk tearing my ACL or paralysis daily just doing my job. NFL players do. That is another reason they are allowed to attempt to recoup the most they can during their window in the NFL. They bust their butts to get better in order to have the opportunity to make that payday. If said player gets hurt before that payday and can't play anymore, think the team is gonna say "well, you did outplay your rookie contract and made the pro bowl, so even though you can't play any more, we are still gonna give you that top dollar contract." Hell no. The player is basically screwed and depending n years played, may not even fall under the injury protection clause the NFL has for him to receive a stipend.

I feel some players carry things to far, as in the most used example, TO, in the second year of a 7 year 49 million dollar deal, and he is the exception. But the rules are there for players to do so, so they are just as within their rights as owners when they wanna go back to the table.

Good post Whodi. I would just like to make one note.

I think I do risk brain damage and paralysis on a daily basis at my job. LOL :)

Well, separating apples from oranges at the A&P is tough work. lol

LMAO.

True, but I guess it could be worse. BnB told me that he dances at a place in Dallas called the Manhole. Poor guy - truckers can get handsy.

Then I guess you have the better gig, although BNB may bring home more bread, and passion marks. :D

So then, what do you guys think about the way an arbitrator is used in Major League Baseball?

I actually like arbitration in baseball. I like anything that keeps the sides talking and allows for modifications of a deal. It seems very similar to the franchise tag to me, but I'm admitedly not very familiar with the way arbitration works in baseball.

I don't know about arbitration in baseball, either.

I found this statement amusing but forgot to include it inmy earlier post:
I'm not trying to pick on you Whodi, but it just struck me as funny being in a contracts discussion of which semantics is the very essence. The slightest change in the use of one word over another can cause a total shift in how a contract will be viewed and enforced. That cannot be dismissed when talking contracts.

Then you misunderstood why I used the word. Danno said he has NEVER seen a team break a contract cause they have the right to release IN THE CONTRACT. He said he has seen many players break contracts. I said I doubt there is release language in the contract itself except possibly referring back to the CBA, which holds the specific language, and that it applies to both sides, meaning a player can withhold his services if he feels he is underpaid. Danno then came back and said IF it's in the contract and a player is released, it is not dishonring the contract still, whether in the CBA or the contract. I said it THAT was semantics because he tried to carry his initial thought into the release wording being in the CBA or the contract, and it didn't fit with the original premisse. IT had nothing to do with what was IN the contracts at that point, but with his reasoning for saying teams were not dishonoring contracts.

But Whodi, even if there is no langauge granting the team a right to release a player without warning (which I think there probably is in every player's contract, regardless of what the CBA might say), if the CBA governs NFL contracts and allows a team to release a player, and they exercise that right and terminate the agreement, that isn't dishonoring a contract. It's "cancelling" a contract by executing a condition of the contract.

Again, kinda off center of my point. MY argument was based on Danno saying he has never seen a team dishonor a contract, but he has seen many players do so. My point in bringing the CBA in is that if he uses that argument for team, then a player has never "dishonored" a contract either since he has the right to seek remedy for a contract he feels is unfair due to the CBA. I am arguing Danno's assertion, I am not really too concerned with getting into a technical dispute of the word dishonoring. I used dishonor cause Danno used it.

Ah, I see. The CBA allows a player to holdout, and therefore players don't "dishonor" contracts by holding out? Right?

The CBA is freakishly long. I just started reading it. After I started I decided to read the standard player contract first. I'm not sure yet whether or not the CBA refers to holdouts, but the standard player contract states the following in reference to the teams' right to terminate contracts:

I haven't seen anything yet that tells me the player has a "right" to holdout.

I am pretty certain it allows for a player to seek reasonable remedy should he feel he has outperformed his contract. I doubt you will find the specific term "a player can hold out," but it provides them the leverage to withhold their services(as I stated earlier) and allows for renegotiation of the contract.

Again, dishonor is not my term. I used it cause Danno used it. I think both sides break contracts all the time, and that is fine with me. I just don't think it is fair when people say one side can do it, but the other side can't.

The player's agreed to this CBA.
Deal with it.
They have the right to hold out because this is America.
If owners don't like it they can cut the player.
and take the hit

The player's agreed to this CBA.
Deal with it.
They have the right to hold out because this is America.
If owners don't like it they can cut the player.
and take the hit

As you may have already noticed the rights afforded all Americans are not unfettered. I would think that there is no right to hold out for more compensation guaranteed to anyone by the constitution.

Obviously there must be some mechanism which allows players to holdout, I just haven't identified it as of yet.

If a player holds out its breech of contract. When player breechs his contract the team can cut him lose or not pay him.

This talk about contracts is just like most jobs. don't try and read into the letter of the contract. If you are hired by an employer you are under contract for that specific job. If you exceed expectations of that job you are rewarded through bonous or a raise. If you feel you are under paid you are free to bring it to management. If you do not agree with what is stated you have that right to sit out and management has the right to terminate your contract. they are paid good money most of us will never see to entertain, me I am paid to defend this counrty if we refuse we (this country would go to hell in a hand basket).

There is some difference between an NFL player and a regular joe under contract. For instance, my wife is a teacher who signs a contract with a private school every year. If she decided that she was being underpaid and chose to holdout after the christmas break until they paid her more, she would be fired and likely sued for breach of contract.

I think about players like Joey Galloway, who held out all of training camp and half a season. There must be some mecahnism that causes the team not to take action. First, I recognize that the team has an interest to keep him rather than fire him and let him go free. That makes sense to me. However, the second part is that the team doesn't file suit for damages. This is probably the key since I believe I read that teams and players are prohibited from suing one another by the CBA.

That really may be all there is to it. The CBA might not grant the player the right to hold out, but the reality is that it is allowed by the operation of the team's need to keep their rights to the player plus the team's inability to sue the player for breach.

Thus, we never see players who are not important to their teams holding out. The player has to be secure enough (if he wants to remain with the team) that he wont simply be cut for holding out.

The exact wording of "hold out" may not be there, but obviously there are mechanisms in the CBA that allow for this action to be taken without fear of reprisal from the team, outside of fines and such. A player like TO can just say cut me, and he will get what he is asking elsewhere. So to say it doesn't grant the player the right to hold out while acknowledging the machinations of the CBA prevent a team from suing a player who is holding out is kinda a thin line to walk to make a point.