‘Manchester united Footballer Wayne Rooney signs new contract worth £30 million’. Discuss the essentials of such a contract with particular reference to the function and efficacy of the ‘break clause’ and ‘confidentiality agreement’ it contains.
Guidance: You do not have to discuss Wayne’s actual contract; you do have to discuss the essentials of a contract.
You must discuss express terms.
What is a ‘break clause’? What is a ‘confidentially agreement’? What is the purpose of such clauses?
Do they protect the parties to the contract?
Do not forget to cite case law.
The issue that will be discussed in this essay is the break clause/exemption and confidentiality agreement with regards to Wayne Rooney’s contract with Manchester United. An exemption clause, like any other term, will be incorporated into a contract if it is contained in a signed document; this was shown in the case of L’Estrange v Graucob (1934) where the purchaser of a vending machine was bound by a very wide exemption clause contained in the small print on the order form which she had signed. A break clause is a term in a tenancy agreement that allows a tenant to leave before the tenancy period comes to an end, without incurring any financial penalty. It is not unusual for a contract clause regarding proprietary information to also be included in many types of agreements. Break clauses are inserted as standard in contracts in Spanish football, and are generally related to the total wages the player will earn throughout his contract.
The insertion of a break clause gives the player (Rooney) the freedom to move if his valuation is met, but it also protects the club against players who try to force cut-price deals’. In terms of Wayne Rooney and Manchester United FC, ‘Wayne Rooney is thought to have negotiated a break clause in his new five-year contract with Manchester United’ says an article in the Times. The striker can leave for as little as £30 million if certain targets are not met on a year-by-year basis. Article 17 of the FIFA Transfer Regulations states that players can unilaterally cancel their contract with their club after a certain protected period has expired if an amount of compensation is paid to their original club. For players over the age of 28 the protected period for their contract is two years, meaning they will be able to unilaterally terminate their contract when they are two years into it.
This rule applies to footballers under the age of 28. Rooney is 24 and therefore his protected period for contract is three years, meaning he will be able to unilaterally terminate his contract once he is three years into it however Rooney is not bound by this because he has his own break clause within his own contract that allows him to leave at any time if he is offered a minimum of £30 million. Some contracts have what is known as a confidentiality agreement, this is a written legal contract between an employer and employee. The confidentiality agreement lays out binding terms and conditions of which prohibit Wayne Rooney from disclosing company confidentials on Manchester United.
The purpose of a confidentiality contract is that it; creates certainty, establishes a contractual obligation, ensures enforcement and supports a claim under general law because it creates the relationship of confidence that is the basis of many claims and it sets out in detail the conduct which the disclosing party expects from the recipient). A confidentiality agreement is in effect for the duration of an employee’s employment and for a period of time following employment termination of which is the period of 5 years in this case. In the following case by Seager Limited v Copydex Limited  2 All ER 415, Lord Denning MR established the principle that even if you do not have a confidentiality agreement in place, under equity law a person who has received information in confidence cannot take unfair advantage of it. That person must not make use of it to the prejudice of the person who gave it without obtaining his or her consent.
A contract is an agreement between two or more parties. A contract is defined as, an agreement made between two or more persons or entities with specific terms made between two or more persons or companies promising to do something in return for money or money’s worth. A contract begins with an offer. The offer is an expression of willingness to contract on certain terms. It allows the other party to accept the offer and provides the basis of the agreement. To be effective, an offer must be communicated, this is to say that there cannot be acceptance of an offer without knowledge of it. A valid contract requires: an agreement; an intention to create legal relations as shown in the case of Balfour v. Balfour  2 K.B. 571, here the courts found that both parties must intend that an agreement be legally binding in order to be an enforceable contract; and consideration (unless the Contract is made by deed).
Whilst each of these three requirements receives separate treatment, they must in reality be looked at together. The rights and duties of both employers and employees are to be found in the contract of employment, they are referred to as terms of a contract. Some of these terms are express terms; that is they are expressly or specifically stated, either orally, say at the initial interview, or in writing. Express terms include things like pay, hours and holidays. The law states that certain express terms must be put in writing and handed to the employee in the form of a written statement of particulars within 8 weeks of starting work. There are other contractual terms called implied terms. These are not expressly or explicitly stated because, in the main, they are fairly obvious to both parties to the contract of employment. Occasionally the courts will imply a term in a contract of employment where an important term has been left out.
Implied terms include statutory rights, such as the right to equal pay and duties such as a duty of care. Each contract clause contained within an agreement is aimed at defining the rights, privileges, and commitments that each party has determined represent the terms govern their working relationship. This is the purpose of such clauses. For example, in this football employment contract, Manchester United agrees to provide Wayne Rooney with a specific set of benefits, such as salary, health insurance, a retirement plan, a football team transfer and any other benefit that both parties have agreed is necessary. At the same time, the contract will contain clauses that determine the range of services that Rooney will provide in exchange for these benefits. The idea is to include as much detail as possible, so that there is very little room for misinterpretation of what is expected of each party.
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