The Court of Appeal has upheld an earlier decision of the High Court that Wayne Rooney’s image rights representation agreement with Proactive Sports Management was in unreasonable restraint of trade and therefore unenforceable. Proactive was, however, entitled to payment in respect of post-term earnings by Rooney.
Rooney entered into the agreement with Proactive in 2003 when he was 17, already hot property. The agreement was for a term of 8 years and a commission of 20% was payable on endorsement, advertising and other image rights income of Rooney.
The agent seems to have done a good job and both parties prospered. Rooney, however, gave notice to in 2008 seeking to terminate the agreement. Commission payments ceased being paid and Proactive sued Rooney, his wife Coleen (for whom it had also been working) and the Rooneys’ respective image rights companies for breach of contract.
The judge in the High Court agreed with Rooney that the agreement was unenforceable. Contracts which “sterilize” one party’s ability to earn a living are unenforceable unless they are reasonable. A common example of this is restrictive covenants in employment contracts preventing the employee from working for a competitor for a period of time after the end of the contract. Such restrictions are only enforceable if they are reasonable.
Rooney’s agreement with Proactive was exclusive and, although the commission rate of 20% was found to be normal, the contract term of 8 years was “uniquely” long (approximately half as long as Rooney’s likely footballing career). Rooney and his family were unsophisticated in commercial matters and had not taken independent legal advice about the agreement before entering into it. There was little meaningful negotiation of the agreement and the judge found there to have been a serious imbalance in negotiating power.
In its appeal Proactive argued amongst other things that the restraint of trade doctrine didn’t apply at all because Rooney’s trade is as a footballer, and image rights are just an ancillary way of gaining additional income. The Court of Appeal rejected this argument. The exploitation of image rights is just as capable of protection under the doctrine of restraint of trade as any other occupation.
The agreement didn’t explicitly deal with commission after the end of the agreement on contracts entered into during its currency. Proactive succeeded in its appeal against the High Court’s finding that post-term commission wouldn’t have been payable under the agreement even if the agreement had been found to be valid. The Court of Appeal decided that post-term commission of 20% would have been payable under the contract if it was valid and, although the contract was unenforceable, Proactive was entitled to be paid a reasonable amount (not necessarily the contractual commission rate of 20%) in respect of continuing earnings from contracts negotiated by Proactive.