Partly due to challenges caused by COVID-19, we have been very busy over the past year trying to get Clubs out of bad contracts that they signed pre-pandemic.
A lot of this is due to Clubs wanting to save money on what they assume will be high legal costs. They end up signing contracts from suppliers and other parties on the universal “it looks alright” principle, without getting them vetted.
This approach may work sometimes. However, when you sign a bad onerous contract – particularly if it is for a lengthy term or has an automatic renewal provision – then there is often no easy way out.
Getting out of a bad deal
Clubs are corporations and consumer protection laws generally do not apply to you. Unfortunately, ignorance of the law or not fully understanding what a contract means will get you no sympathy before a court.
Sometimes, through strategic advice, we are able to get Clubs out of bad contracts. We recently got a Club out of a very long term catering licence, after putting the caterer to strict compliance with legislative requirements such as paying full award wages to employees. The caterer could not comply with those obligations and had to walk.
You don’t always catch such a lucky break however. In other contracts with large corporates in particular, they will often stand their ground. In one case, we were able to negotiate the Club out of a contract where the Club was going broke partly because of that arrangement – it was likely to enter administration if the contract wasn’t re-negotiated.
The path forward
We are happy for you to call any member of our team to get a fee estimate to look at the contract. It is often not as expensive as you may think. We see hundreds of contracts in the club industry and are often able to quickly identify the most onerous provisions you want removed or changed in a contract.
Also, you may be surprised to know that we are almost always able to negotiate a better contract which often saves the Club a lot of money and headache over the term of the contract for a relatively inexpensive legal spend.
If you are reviewing existing contracts with which you are not happy, then it is best to get advice early rather than sitting on a problem – to allow time to work out a strategy moving forward.
As a Club manager you need to be careful in signing off on contracts without legal advice. If things go truly pear-shaped, the Board will only have one person to look at to attribute blame.