In a landmark Arce^[1] ruling, the European Court of Justice (ECJ) has delivered a decisive blow against exploitative contract terms, particularly those targeting young athletes. The case, which originated in Latvia, involved a 15-year contract between a teenage basketball player and a sports development company, binding the athlete to pay a significant portion of his future earnings. The ECJ emphasized that national courts must carefully assess the fairness of such terms, especially when they lack transparency regarding financial consequences.

The main points to note from the CJEU Ruling are: 

• A contract between a minor (who is not a professional sports person) and a business entity involved in career management and development services is a contract for services (consumer-supplier relationship) and not a sports related contract (refer para 54 and 59 of the CJEU Ruling). 

• A court of law is not precluded from examining the fairness of a contractual term if the term was not individually negotiated between the parties but is clear and intelligible (refer para 64 of the CJEU Ruling). 

• The position of a consumer is weaker than a supplier both in terms of bargaining power and level of information. This therefore warrants the necessity for the supplier to be transparent as to the contractual terms. Such a duty of transparency has to be interpreted broadly ((refer para 69 of the CJEU Ruling). 

• The key criteria to determine whether a contractual term is fair is not limited to examination of whether the term is grammatically intelligible to the consumer concerned. Instead, the assessment involves whether from the facts and circumstances surrounding the conclusion of the contract, it can be inferred that the information provided by the supplier before the conclusion of the contract, enabled the consumer to make a prudent decision as to the final consequences of concluding such a contract (refer paras 70 to 73 of the CJEU Ruling). 

• The test of transparency by the seller or supplier is limited to the period before the conclusion of the contract (refer para 72 of the CJEU Ruling). 

• There are also other factors relevant for determining whether a particular contractual term causes significant imbalance to the parties rights and obligations under the contract, namely, the fair and equitable market practices on the date of conclusion of the contract in the matter of remuneration in the field of the sport concerned (refer para 84 of the CJEU Ruling). Additionally, all facts and circumstances surrounding the conclusion of the contract as well as the other terms of the contract are relevant for consideration. 

• Lastly, the fact that the player was a minor at the time of conclusion of the contract is a relevant factor for determining whether a particular contractual clause is fair, especially when the contractual term stipulates that, in exchange for the provision of services for development and career support for a sportsperson, a consumer undertakes to pay remuneration equal to a percentage of the income received over the 15 years following the conclusion of the contract (refer para 104 of the CJEU Ruling).

In our line of work, we frequently encounter similar situations where companies, under the guise of supporting young athletes, secure disproportionate benefits for themselves in the event of the athlete’s future success. Young athletes and their families often lack the necessary knowledge of the sports industry and have little to no experience navigating its legal and financial complexities. At such a vulnerable stage, they are easily swayed by promises of opportunity and are rarely in a position to seek independent legal advice before signing binding agreements.

This judgment by the ECJ is a significant step forward in strengthening consumer protection across the EU. It sends a clear message that contractual fairness is not optional—especially when it comes to long-term agreements involving minors. Nevertheless, it is essential to emphasize the importance of obtaining independent legal review before signing such contracts—without it, athletes risk committing a significant portion of their career earnings to so-called “investors” under terms they may not fully understand.

^[1] Case C-365/23 [Arce] – (the name of the case is a fictitious name) – https://curia.europa.eu/juris/document/document.jsf?text=&docid=296856&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=15552496