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Proactive Sports Management Ltd v Rooney [2011] EWCA Civ 1444

Agreement concerning ancillary business activity of footballer in restraint of trade

Facts

The respondent, Wayne Rooney, assigned his image rights to the third respondent company. An agreement between the respondents and the appellant sports company provided that the appellant would receive a commission of 20% of the gross sum payable under any endorsement made by Rooney. The defendants purported to terminate the agreement and the appellant elected to treat that as a repudiatory breach and brought a claim for unpaid commission.

Issue

At trial, the judge held that the doctrine of restraint of trade applied to the agreement as it imposed substantial restraints upon Rooney’s freedom to exploit his earning capacity over a long period. The agreement was therefore unenforceable. On appeal, the appellant submitted, inter alia, that the agreement did not engage the restraint of trade doctrine because Rooney’s trade was as a footballer and the agreement concerned commercial endorsements which were a means of obtaining extra income. Therefore, the agreement did not restrict his earning potential but capitalised upon it.

Held

The Court of Appeal found that the exploitation of image rights was almost always going to be an activity which was ancillary to other activities but the ancillary activity of exploiting image rights was just as capable of protection under the doctrine of restraint of trade as any other occupation. A number of factors such as the length of the agreement, the circumstances surrounding its execution (e.g. lack of legal advice) and the practical difficulties for termination rendered the agreement outside the boundaries of a normal commercial contract which regulated a party’s business activity. The well-established effect of a finding that a contract was in restraint of trade was that, once a party withdrew from the contract, the contract was unenforceable.

294 words


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