Rooney and restraint of trade
20 February 2012
A dispute involving Wayne Rooney and his previous sports agency has given rise to an interesting reminder on the scope (and effect) of the restraint of trade principle.
At the age of 17, Wayne Rooney and his parents entered into an eight-year image rights representation agreement (IRRA) with his agency, Proactive. When his agent (Paul Stretford) was dismissed from Proactive and set-up a new sports agency, the Rooney’s followed him across. Proactive claimed a contractual right to commission on Rooney’s earnings for the remainder of the agreement’s term (a flat 20% fee). The judge at first instance held that:
- An eight-year agreement was well in excess of agreements with other footballers.
- Rooney was only 17 when the agreement was entered into and he and his parents were “utterly unsophisticated in financial and contractual matters”.
- The agreement was not the outcome of a process of negotiation between equals and that the restrictions were unenforceable as a restraint of trade.
The appeal, (Proactive Sports Management Ltd v Rooney [2012] IRLR 241) was unsuccessful and Lady Justice Arden stated a key consideration is whether the contract is “oppressive”. She concluded:
“It will be recalled that the Rooney’s had no legal advice at the time of execution. This is all the more important in the light of the judge’s finding that, on Proactive’s side, a longer term than usual was demanded for the IRRA because it was known that WR was ‘hot property’. The absence of independent legal advice in my judgment deprives the fact that the Rooney’s were content with the terms of the IRRA of probative weight on the restraint of trade issue. It underscores the inequality of bargaining power between the parties. Moreover, it predisposes the agreement to a finding that it was one-sided, unfair or oppressive.”
The Court of Appeal found that the contract constituted a restraint of trade and dismissed the appeal. Importantly they held the offending clauses could not be severed. As Mr Rooney had withdrawn from the contract, the contract was now unenforceable. Therefore, as Mr Rooney refused to abide by the Agreement, Proactive could not enforce its contractual right to 20% commission.
