Tearing up a Contract
There are a number of issues which arose in connection with the recent West Ham/Carlos Tevez saga. One was the status of the contract that West Ham had with Tevez's representative Kia Joorabchian/his company Media Sports Investments (MSI). Effectively West Ham "tore up" and terminated all agreements with Joorabchian/MSI so as to allow the club to continue to play Tevez. (This being a condition imposed by the Premier league of them being able to play him). Those arrangements are the ones under which West Ham acquired the player in the first place. However having acquired him Tevez's Premier League registration was held by West Ham.
At the heart of the dispute was control by a third-party of a player contracted to West Ham, forbidden by Premier league rules. Whether that arrangement should be objectionable in any event is another issue. One can see that control of the player by a third-party which might cause the player to act in a way contrary to the interests of the club he plays for, or in favour of another club, would definitely be objectionable. Provided there is no risk of that sort there might be differing views as to whether and if so what objection in principle there ought to be to such an arrangement. No doubt one fear is that a series of agents will effectively end up controlling a large number of players and hence clubs and possibly the league itself. In any event that rule forbidding third-party ownership or control was the one at issue. That was why there was a disciplinary hearing involving West Ham and why West Ham "tore up" contracts as above so as to allow Carlos Tevez to continue playing for them (as he did with such spectacular effect). There has been a legal challenge by Sheffield United and others to the penalty imposed. It now seems there will also be court proceedings by Sheffield United against West Ham. There was also the prospect of both arbitration and court proceedings regarding the Carlos Tevez transfer to Manchester United (which in the event was compromised). I shall be commenting on various legal issues that arise over succeeding articles.
The key point to note at the outset is this idea of "tearing up" a contract. That is not something generally that can be done. Both sides have obligations under a contract. However, generally one side cannot end the contract by itself. It may act in such a way as to indicate that the contract is over. This would be what legally would be termed a repudiation of the contract. In normal circumstances the other party does not have to accept the repudiation and treat the contract as at an end. Although they do not have to accept the repudiation, in practice it might be difficult to enforce a contract (there are only certain types of contract that will be specifically enforced by the court, although in any event if you are in breach of contract the court can award damages to the injured party and can also stop the wrongdoer from doing various things which are inconsistent with its obligations). However they might accept the restrictions of the remedies that a court will offer but still wish to stop a contract ending. The way this was once put by a senior judge was "an unaccepted repudiation is a thing writ in water". Try writing in water and you will see it means nothing, and hence is valueless. Therefore in general one cannot end a contract by tearing it up. The other side can seek to insist on the contract continuing.
Therefore West Ham could not at law end their contract on ordinary principles. However not knowing the full facts it is not clear what stance they may have taken. What was different here was that they owned the registration of the player. What the Premier league might have had in mind was that if West Ham took every step open to it to end the third-party arrangements, that since it held the registration act would suffice for their purposes. Although we do not know, they may also have been trying to run some form of illegality argument. (If your contract is illegal then it cannot be enforced, although it is difficult to see as part of the general law what illegality would have been relied upon. A subsequent article will explain illegality in more detail). Alternatively the suggestion may have been the particular contractual circumstances permitted the club to do this because the deal was subject to the Premier league rules and so if the rules required terminating third-party influence that West Ham was entitled to do that. The courts can also in some circumstances construe a party as having accepted a repudiation (even though it does not lose its right to claim damages) because it took no steps to indicate that it was seeking to keep the contract running when the other party said it had ended. On the other hand West Ham might have been saying that it was the other party which had committed a repudiation and all it was doing was accepting that repudiation. (If effectively the other side have said they will not comply the bargain, or have committed a sufficiently serious breach of that bargain, then that is a repudiation which you can accept. Therefore whilst you cannot "tear up" a contract, if the other side have effectively done just that you can accept that repudiation and end the contract (as well as suing them for damages).
All this is speculation. What it illustrates is, as is always the case, that the particular facts determine the legal position and unless you know those facts you cannot say for certain what the legal position is. What can be stated with certainty however is that in the ordinary case (without something more such as the type of arguments referred to in the previous paragraph) you cannot bring a contract to an end just by saying you will no longer fulfil its provisions. The other party has to do something which shows that they also accept that the contract is at an end whether that is positive (i.e. saying this contract is now at an end and we will sue) or, more rarely, by passive conduct which may indicate that it is effectively accepted that the contract is at an end. However if they have repudiated the contract (either by saying that they will no longer fulfil the contract or by committing such a serious breach that you will be entitled to treat the contract as at an end) then you can.