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Ostensible authority of a Managing Director

Can a football manager who agrees the terms of a contract of employment with the Managing Director of the Club he is joining assume that the MD has authority to enter into that contract?

Not necessarily, argued the Defendant Club before the High Court in Berg v. Blackburn Rovers FC.

Henning Berg, the ex-Manchester United and Blackburn player, who gained 100 caps for Norway, was appointed as Blackburn Manager on a 3 year fixed term contract in November 2012. He was dismissed after only 57 days in post. His dismissal triggered a clause in his contract under the terms of which he became entitled to a payment of basic salary (calculated on the basis of a set formula) for the balance of his fixed term. Initially, the Club admitted the claim and sought time to pay. It then applied to the High Court to withdraw its admission on two grounds, namely that the Managing Director who had agreed the terms of the contract only had authority to agree to a liquidated damages clause based on 12 months’ basic salary, and secondly that the clause in question constituted a penalty.