The Spanish Supreme Court recognized the existence of an oral partnership between a football players’ agent and his collaborators

The Supreme Court analyzed a case that originated from a dispute between a professional football players’ agent and his collaborators, who had orally agreed – without any written documentation – to jointly carry out the activities of scouting and representing players, as well as the provision of related services. Specifically, in 2006, four individuals entered into an oral agreement the purpose of which was to perform functions of scouting and representing a total of twelve high-level professional football players starting in the 2007/2008 season.

The distribution of profits allegedly agreed was 50% for the agent (who contributed his name, reputation and player portfolio) and the other 50% distributed equally between the other three partners (16.66% each), who contributed their services.

The key question in the case was whether a partnership agreement could be said to exist in a situation where the parties’ legal relationship was not recorded in writing. The arrangement involved four individuals who agreed to make certain contributions and services to achieve a shared objective: the scouting and representation of professional football players, with the intention of distributing the profits among themselves according to the agreed percentages.

The issue is: Are the essential elements – consent, subject-matter, and cause – present so as to confirm the existence of a contract? Do professional reputation, the portfolio of represented players, and the scouting and management services qualify as valid contributions capable of forming the common pool of assets required for a civil partnership?

Validity of the oral agreement, scope of intangible contributions and effects of the partnership’s dissolution

The Supreme Court rejected the appeals for procedural infringement and cassation lodged, confirming the prior judgment of the Barcelona Provincial Appellate Court and reiterating its arguments. The most interesting issues addressed can be summarized as follows:

• Evidence based on presumptions: electronic communications as key element

Given the absence of any written record of the agreement, the Supreme Court examined whether the Barcelona Provincial Appellate Court had correctly relied on evidence based on presumptions.

The judgment confirms that article 386 of the Civil Procedure Law (the “LEC”) allows a fact to be presumed true “when there is a precise and direct link, according to the rules of human reasoning, between the admitted or proven fact and the presumed fact.” In this case, the indications evidenced which allowed the court to presume the existence of a partnership agreement were:

• An e-mail dated July 24, 2013 detailing the invoice calculation system: starting with the season’s income, expenses were subtracted, the balance was divided by six (resulting in 16.66%), and amounts received on account were deducted.
• Several invoices issued by the partners reinforced the idea that they carried out a business which partly belonged to them.
• An e-mail dated September 25, 2013, in which the majority partner responded “Ok” to a proposed distribution of 50% for his company and the remainder among the other partners.
• Several e-mails in which the first person plural was used (the personal pronoun “nos”) in Catalan (“ens pagarà”, “ens corresponen”, “ens repartim”) to refer to the payments and distributions, with an affirmative response from the majority partner.

Thus, the court confirmed that there was a logical link between these indications and the existence of the partnership agreement, applying article 386 of the LEC. No rebuttal evidence was submitted by the defendant companies.

• The essential elements of the civil partnership agreement: special reference to the contribution of professional reputation and client portfolio

The Supreme Court made a legal analysis of the essential elements of the partnership agreement.

Regarding consent (affectio societatis), the court reiterated that a civil partnership agreement may be oral as Spanish law upholds the validity of contracts based solely on the parties’ consent (article 1,278 of the Civil Code, “CC”). A different matter is the evidentiary challenge (forma ad probationem), which in this case was resolved through indications, as discussed above.

As for cause, the judgment recalled that “the pursuit of profit constitutes the cause of a partnership agreement” (article 1,665 of the CC and article 116 of the Commercial Code); it consists of obtaining a profit that may be distributed among the partners. For that very reason, there is a prohibition of leonine clauses (article 1,691.1 of the Civil Code) which prevents any partner from being excluded from any share in profits or losses.

Particularly relevant is the analysis of the subject-matter of the agreement, that is, the contributions that the partners undertake to pool together. The Supreme Court highlighted that the variety of possible contributions, including the goodwill derived from a person’s professional reputation or standing in the market and a list or portfolio of clients. Pursuant to this interpretation, the judgment confirmed that the following qualify as valid contributions to a civil partnership agreement: the majority partner’s name and reputation as a professional football players’ agent – built up over years of practice – and his portfolio of players; and, on the part of the other partners, their services.

• The dissolution of the partnership and the liquidation of pending business: protection of the partners’ rights

The Supreme Court confirmed that the partnership was dissolved in the 2013/2014 season due to loss of trust among the partners, manifested in the majority partner's refusal to pay the others their share of profits (article 1,700.4. of the CC). However, pursuant to articles 1,705.II and 1,706 CC, the court stated that in order for a partner’s withdrawal to be effective, it must be done in good faith and in a timely manner: “without appropriating for oneself the profit that should have been common, and only once pending business has been completed”.

Accordingly, the effects of the agreement remain until the end of the football players’ representation contracts that were in force when the partnership was dissolved (2013/2014 season), thereby preventing the defendant companies from taking exclusive advantage of the income generated by the activity of the other partners. The judgment makes it clear, moreover, that the effects of the dissolved civil partnership cannot extend to any new representation contracts arranged by the former partners with the football players after the partnership’s dissolution.