There has been a lot of talk about contracts in the news lately particularly in the world of football. That’s nothing new, after all, I have in the recent past talked about contracting issues surrounding the said Wayne Rooney in a previous blog.
So, in a week when we saw Gordon Strachan tear his contract up and walk away from the Manager’s job at Middlesborough Football club and Wayne Rooney refusing to sign a new contract at Manchester United, we at Cay Moore Associates are asking the question “is a contract worth the paper it is written on?”
The Encarta dictionary UK version defines a contract as “a formal or legally binding agreement, e.g. one for the sale of property, or one setting out terms of employment”. But what does this definition really mean, and why in spite of this definition, can parties disregard their contracts without seemingly too much repercussions?
A more detailed definition of contract at http://legal-dictionary.thefreedictionary.com/contract defines a contract as:
- an agreement with specific terms between two or more persons or entities
- in which there is a promise to do something
- in return for a valuable benefit known as consideration
The existence of a contract is evidenced by the following factors:
- an offer;
- an acceptance of that offer which results in a meeting of the minds;
- a promise to perform;
- a valuable consideration (which can be a promise or payment in some form);
- a time or event when performance must be made (meet commitments);
- terms and conditions for performance, including fulfilling promises;
Contracts, terms of reference, agreements whatever name is given to the process, has always been at the heart of most business relationship. Indeed, in days gone by, businesses used to ‘contract’ on the gentleman’s handshake. The parties would discuss and agree terms and literally shook hands and the deal would be done. It is interesting to note that people did actually honour their words then much more than they do now. Could this be because they had better working relationships then?
So, what is the essence of the contract in this scenario?
Wayne, you play for Manchester United, scoring millions of goals every season, and in return Manchester United will pay you millions of pounds every season for playing for them. Well, that’s the simplistic view, because in the real world, the terms of these types of contracts will be quite detailed.
Furthermore, there would almost certainly be an option open to both parties to renew the contract. Wayne in refusing to enter into further contract negotiations with Manchester United is presumably exercising this option citing the following reasons:
- “Manchester United lacks ambition in not signing star players to the club”
- “It is all about winning trophies” and because of the lack of investment in star players and despite his best efforts (he was the Club’s highest scoring player last year) they haven’t been winning enough trophies.
But are these reasons enough for him to refuse to renew his contract with the club? Well, if these two things were indeed part of his personal contract with Manchester United, and if it can be proven that Manchester United has indeed reneged on these issues, then we could argue that he is not in breach of his contract.
But the word on the street is that there has been a falling out between Wayne and Sir Alex Ferguson. And this is the bit that interests me most, and which I would like to explore further as the whole world knows that no one messes with Sir Alex.
You see, increasingly, in business, it is all about the relationships between parties in businesses. Nurture your business relationships and contracts need not be such a thorny issue. If we compare Rooney’s situation with that of Gordon Strachan of Middlesbrough Football club, we can deduce straight away that there must have been a very good relationship between the parties. They were both able to sit down, negotiate and settle their differences without reference to the contract! No news conferences! In today’s litigious world, that is truly remarkable.
This brings me to believe that the problems between Wayne and Manchester United might actually extend beyond the terms of their “contract” and may in fact be attributed to relationship issues. Is there a power struggle between the parties? If there is, who will win the PR battle in the end, but that is another story.
Notwithstanding contracts that would have been drawn up by some of the best lawyers in the country, the parties seemed to be heading for a stalemate. Rooney dug his heels in and Sir Alex insisted that Manchester United had done nothing wrong, and that Rooney should more or less stop being ungrateful. The odds were on as to where Rooney would be peddling his football come January 2011.
But before I could even finish writing the article, the situation changed and there was a complete turnaround. Rooney and Sir Alex were posing for the cameras because Rooney had just signed a new contract to stay at Manchester United for another 5 years. Hooray!
Now we will never know the full stories until the autobiographies are published, but I can guarantee that somewhere along the line there was a clandestine meeting between the parties where they kissed and made up. You see, at the end of the day, it is all about the relationships. Having a good relationship with your clients is worth far more than the paper that your contract is written on!
My question for you my readers is: what kind of relationship do you have with your clients, suppliers and contacts, is your contract worth the paper it is written on?
For more information on contract issues contact firstname.lastname@example.org.
Sources of information:
The Encarta dictionary UK http://legal-dictionary.thefreedictionary.com/contract
Image courtesy of http://www.sxc.hu