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Contract Retract

Unless you have been living under a rock in the sports world this week then you would have heard about Billy Donovan’s U-Turn from the Orlando Magic.

Quick Re-cap:

Billy Donovan, former Gator basketball coach decides to leave UF and take the head coach position at Orlando Magic. Donovan, who took the Gator’s to 2 consecutive titles turned down a contract extension worth $3.5 mil. a year to sign a 5 year $27.5 mil. deal. [Donovan says ‘hello’ to Magic; goodbye to Gators]

Seems pretty straight forward but 24 hours later there Donovan was having second thoughts and wanted out of Orlando and to re-join Florida.

What I want to focus on is the ramifications of reneging on a contract

Some may have read my post on NRL player Steve Turner [U-Turn(er)]. In that case the deal was monetary plus players. Obviously players can not be traded in this instance.

While the terms of the contract release by Magic haven’t been disclosed [Magic release Donovan from contract], there is one clause that would be put in place.

Drawing on an Australian case (and what I learned in my Sport and the Law class), which I think holds relevance to Donovan’s predicament is Buckenara vs. Hawthorn. Gary Buckenara played for Hawthorn FC, but wanted to play for West Coast FC. He sued Hawthorn claiming restraint of trade, while Hawthorn sought an injunction. Obviously any financial compensation was irrelevant, as it is difficult to quantify.

The court restricted Buckenara from playing football for any club in the same league as Hawthorn.

This would be a likely clause in the settlement of Orlando and Donovan, with Donovan not being able to take a job in the NBA for the life of the contract that he had with Magic.

As being a basketball coach is his only profession, a restraint on Billy not coaching any team would be too much, taking a massive toll on his livelihood.

Let it be known that if a player/coach/athlete etc. has any other form of skill, a restraint on them competing/coaching in any form may be upheld.

In the case of Hardie vs. Hawthorn, it shared similar attributes to the Buckenara case. However, Hardie was also a tradesman, and the court banned Hardie playing football altogether.

another vital rule is:

In contracts involving personal services the law states that performance of that contract will never be enforced

These issues are important for Agents to learn so they understand what ramifications will happen if their client renegs on his/her contract.

– Chris Lesley

12 replies on “Contract Retract”

The flip flop in contracts is a common occurence.

Without knowing the terms of the Donovan-Magic contract (which can remain private), we can only speculate at what rights each of the parties have.

In most servics contracts, the terms of breach by each party are layed out carefully, whether the breach occurs within the first 48 hrs or after the first year (I believe Donovan agreed to a 3-year deal).

Assuming that the parties are sophisticated parties (I’d assume Donovan’s agent/attorney has dealt with this type of contract before.), the terms of a breach could be anything: from monetary compensation to the Magic as well as a reasonable restraint on the services of Donovan (as Darren pointed out).

It is important to remember here that the law has a preference to allow parties “freedom to contract.”

Therefore, say what you want about Donovan, but he knew the terms of the breach when he signed the contract and rightfully, has the ability to breach on his contract and suffer whatever the contractually scripted consequences are.

It would be interesting (and maybe uncommon in coach-team contracts) if Donovan’s attorney considered his client would flip/flop shortly after agreeing to the contract and therefore designated a clause if that instance came to fruition. An “escape clause” after a reasonable time period might not be a bad idea for future agents.

1) It is my understanding that in the state of Florida, under a non-at-will employment contract, a negative injunction (non-competition) can be pursued for the amount of time which the contract would have employed the breaching party.

For argument’s sake, let’s say Hardie vs. Hawthorn would apply in the state of Florida. I would still argue against the case being applicable to this situation because Billy D would have a multitude of other coaching opportunities; he just wouldn’t be able to coach in a specific league (the NBA). This would be analogous to having a non-compete clause that allows a breaching party to work for other employers in the same industry, but not with a direct competitor.

2) Chris is correct that service contracts cannot be enforced. This is a common misconception with laypersons who are not well-versed in legal concepts. Enforcing a service contract would be against the 13th Amendment’s prohibition on involuntary solitude.

Just my 2 cents…

Dusted off the ‘ol contracts textbook (Darren can look forward to this stuff come the fall):

“While specific performance of contracts requiring personal service has traditionally been denied for reasons of both policy and practicality, courts have been willing to grant “negative enforcement” by way of injunction when the services were unique and the employee expressly or impliedly covenanted not to work for others during the term of employment.”

Important to note that a negative injunction will not be issued if it produces an “undesirable continuance of personal relations” or will “leave the employee without other reasonable ways of making a living.”

IOW…Donovan’s services were unique, largely speaking, but any restriction that would’ve kept him out of coaching altogether would be void. But the 5-year NBA-bar is fine.

These are common laws rules that can be traced back to England. Should be similar in Australia thus, no?

Jason I think you’ve just proved my point. It is Billy’s livlihood and he has no other trade, an injuction across basketball (and the whole sporting arena) would not be acceptable.

Interesting edge by Rovell.

I’d assume the Magic would settle with the angry season ticket buyers before it went to court to show good will between front office and fans.

As far as the injunction against Donovan coaching for another NBA team during the designated contract time, it would seem moot at this point because he immediately announced his decision to return to UF when he announced his decision to breach his Magic contract.

I’m thinking of other third party suits to be brought against Donovan. Maybe the NBA? Maybe a couple UF students who accepted admission to another school because they only wanted to go to a school where Donovan coached? Hehe.

Well it’s only “moot” now that they have agreed mutually that he cannot seek NBA employment for 5 years. But for that mutual agreement he could’ve again bolted UF in the future for the NBA.

I’m sure if Donovan hasn’t made express oral promises to recruits in the past that he’ll be forced to do so in the future. The point has already been made that other schools will use this against Florida. What is Donovan’s word worth now? Arguably not much. From a legal standpoint, it’d be tough for students or student athletes to prove actual harm or damage, one of the first requirements for a suit.

I actually think that the whole situation strengthens Donovan’s word and the UF basketball program. Think about it. You are a college basketball coach. The next step is the NBA…there is no higher step. You work your whole life to get to the top. Donovan did what most coaches would do, sign with a professional team that paid him more money than UF. But he quickly came back to a program that he cared too much about.

This shows recruits that a COLLEGE PROGRAM could be more preferable than the NBA. It also may say something to players about leaving early. It also shows how much Donovan truly loves the Gators and recruits know that at least for 5 more years, Donovan is not going anywhere.

I agree, at least for the next 5 years. But the fact that he made the initial decision in the first place shows he may not be as married to the concept of staying at Florida forever (a Coach K type, for instance) as someone people would may have initially thought.

I agree somewhat with Darren, but the flip side of that argument is the fact that now other coaches and recruiters will preach stability at their respective programs, espousing a non flip flopping coach and saying that Donovan could escape and go somewhere else.

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