Force Majeure

The recent tragic events leading to the untimely death of Emiliano Sala, just days after his transfer to Cardiff City FC from Nantes for a reported £15million, has also shone the spot-light on the legal principles governing the transfer.

Although this is an extremely sensitive subject for obvious reasons, some would argue that these sensitivities have been amplified by the decision by Nantes to threaten legal proceedings against Cardiff City to ensure payment of the agreed transfer fee, after the first part of the transfer fee was withheld.

There is no dispute that although he never played for Cardiff City, the contracts between Nantes, Cardiff City and Mr Sala had all been signed satisfactorily and so he was legally a Cardiff City player at the time of his death.

The legal issues surrounding his contract break down into 2 discrete parts:

1. Mr Sala’s performance of his duties as an employee of Cardiff City, and
2. His value as an asset to the club.

 

1. Employment

Mr Sala was a Cardiff City FC employee for 2 days and had not played a game for the club. His contract was scheduled to be for a duration of three and a half years.

One of the abiding principles of contract law is that if payment is due to one party on completion of the entire job, the job must be complete before the receiving party is entitled to receive it (Cutter v Powell (1795) 6 Term Rep 320: 101 ER 573 (Court of King’s Bench)). The facts of that case are not dissimilar to the circumstances relating to Mr Salas.    In this authority Mr Cutter was employed as a second mate for a sea voyage from Jamaica to Liverpool in 1793. He was promised 30 guineas, payable 10 days after arrival at Liverpool if he performed his duties for the journey. He died on the journey, approximately 2 weeks before his arrival in Liverpool.  The Court found that although not his fault, he had not performed his task in full and so no money was payable to his widow. The facts of that case did not require a sum to be paid to his widow for the work he had performed, an arrangement known as “quantum meruit”.

In this current situation, Mr Sala cannot fulfill his part of the employment contract. However, payment of his weekly wages will not have been dependent on fulfilling the whole of the lifetime of his contract, and he would have been paid weekly if the tragedy had not occurred. The contract is likely to have had what is known as a “force majeure” clause which relieves the parties from performing their contractual obligations when certain circumstances beyond their control arise, making performance of the contract commercially impracticable, unlawful, or impossible. If such a clause is included, the contract will be deemed to have been terminated.  The club had a practice of taking out insurance covering the death of its players up to £16million, and in that situation, the insurance should pay Mr Sala’s family a sum covered under the terms of the insurance policy. Whether the policy will cover Mr Sala’s £2.5million annual wages for the entire lifetime of the contract will depend on the terms of the insurance policy and the employment contract.

2. His value as an asset

The size of the transfer fee, payable in installments, will likely have been dependent on Mr Sala making a prescribed number of appearances for Cardiff City.  If such a clause was included in the transfer contracts, as he made no appearances, the transfer fee payable to Nantes will not be as large as had been anticipated by both parties. However, payment will still be legally binding in exactly the same way as if Mr Sala had not been killed, although the amount Cardiff City have to pay Nantes will be less than that.

The unusual circumstances of this tragedy are a reminder that parties should attempt to address all possible issues when entering into a contract. The mere fact that an event is unlikely should not mean that it is ignored in the drafting of an agreement.

Meaby & Co Solicitors LLP are lawyers experienced in various employment issues. Should you require advice on any aspect of employment law, including the above, please contact Chris Marshall or Steven Eckett on 0207 703 5034.