TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

California has become the first state to allow collegiate student athletes to benefit financially from the use of their name and likeness and to enter into licensing contracts by recently passing Senate Bill 206, a bill known nationally as the “Fair Pay to Play Act.” But, we recommend holding off on preparing templates for student athlete license and promotional agreements for now; the legislation will undoubtedly face zealous resistance from the National Collegiate Athletic Association (NCAA) in the time before the law takes effect.

On September 30 the California Senate enacted Senate Bill 206, which would effectively end amateurism for NCAA athletes and therefore is a game changer for the NCAA, which currently prohibits college athletes from receiving compensation. The California law does not require colleges to pay athletes a wage, but it allows athletes to procure business and sponsorship deals.

A recent Delaware court ruling found an agreement to be unenforceable despite being executed by each of the parties via “orphan” signature pages because there was insufficient evidence that the parties had a meeting of the minds as to which version of the contract they were signing. While the facts of this case could be characterized as a “perfect storm” of circumstances to invalidate the commonly accepted practice, it is worth noting the court’s findings for any takeaways that could help you avoid being blindsided by the invalidation of a contract.

Many contracts in the United Kingdom and elsewhere contain amounts that are indexed to the Retail Price Index (RPI). Morgan Lewis partner Bruce Johnston recently published a LawFlash outlining how recent changes to the UK RPI could impact contracts that leverage the index.

More broadly, many clients take for granted that indexes published by third parties (for example, the Consumer Price Index in the United States) generally reflect the economic reality of their transactions. We recommend that before simply referring to a particular index, lawyers take a few extra steps to add value for their clients.

  1. Look up the index. Does it still exist? Consider adding a mechanism into the agreement that allows a new index to be selected in the event the chosen one is discontinued.
  2. Has the index been around for a while? If not, consider using something that has.
  3. Has the index changed recently? If so, alert your client.
  4. Are there other indexes that may more accurately address the economics of the transaction? For example, is the Producer Price Index potentially more applicable than the Consumer Price Index?

Read the full LawFlash >