Eastham v Newcastle United Football Club

Eastham v Newcastle United Football Club Ltd [1964] Ch 413

Retention provisions in professional football contract acted in restraint of trade

Facts

The governing body of football in England (FA) provides that a player must register with the association of his club and while so registered can only play for that club. At the end of a season, players may be retained by a club. If retained, a player is banned from playing for any other club but is not employed by the club and no contract existed until he re-signed with it.

Issue

The plaintiff, a professional football player, was retained by the defendant club who refused to transfer him to another club. The plaintiff sought declaration that his agreement with the club and the rules of the FA relating to retention were not binding as being in unreasonable restraint of trade and/or ultra vires. After the writ was issued, the plaintiff agreed to his transfer and this was duly carried out.

Decision/Outcome

The Court held that the retention provisions operated in restraint of trade. The retention provision were restrictions coming into operation after the employment was terminated and not as the exercise of an option causing the employment to continue. The retention notice does not have the effect of re-employing the player as he must re-sign a contract. Before re-signing, he can receive no wages.  The retention provisions, together with the transfer provisions, were more than what was reasonable for the defendants to protect their interests. Therefore, the retention provisions substantially interfered with the plaintiff’s right to seek employment and operated in unreasonable restraint of trade and were ultra vires.