asu66 wrote:wataugan03 wrote:Its well within anyone's rights to break a contract, regardless of whether there is an exit clause. And there are no consequences other than paying the other side their expectation damages minus their obligation to mitigate (all an exit clause does is attempt to define this number in advance). You cannot be jailed or fined for breaking a contract and you can't be forced to pay punitive damages. You just have to make the other side whole. It might be morally questionable, but its certainly legal. The most common explanation for this is the theory of efficient breach:
http://en.wikipedia.org/wiki/Efficient_breach.
You just have to make the other side whole.
And just how, pray tell, does a relatively penniless, aspiring college freshman do that?
We're getting pretty theoretical here. But, assuming a world where the NCAA doesn't exist and App could only enforce its rights in court:
First, whether the breacher can pay the damages does not alter the breacher's right to breach. The institution can get a judgment, but if the breacher is to broke to pay all you can do is garnish a portion of their future wages - they might get out of the debt all together through bankrputcy. The breach might not be a good idea, but there's no law preventing it, no potential punishment.
Second, the damages would probably be so small the school would never even bother to enforce its rights. Let's pretend Devonte's services for his freshmen year are expected to be worth 3k (determining this number would be the largest and most expensive aspect of litigation and settlement negotiations). Devonte wouldn't owe 3k. he would owe 3k minus the expected worth of the best player we can get to replace him if with reasonable efforts. If we pretend that player's value is 2k then Devonte owes 1k.
If all this sounds absurd in this context, its because it is absurd. This is amateur athletics. App Basketball isn't going to make money. The value of in-kind services it gives players is worth more than what they bring to the table. The player's compensation isn't taxable income. The NCAA operates as a cartel with regulating powers the federal government doesn't even have. The transfer sit-out rule is an overly broad, non-negotiable non-competition clause that would not be legally enforceable in an employment context. There probably aren't any business lessons here. There certainly aren't any contract law lessons.
