Monday, March 14, 2022
A New Deflategate
Tom Brady's career will always be defined for some by the original deflategate, involving allegations that Mr. Brady (seen at right) had ordered that footballs be slightly under-inflated, making them (I guess) a bit easier to catch. It's great that the scandal has a "gate" name. The original "gate" scandal, Watergate, involved a Republican incumbent burglarizing the democratic national committee, seeking advantage in the upcoming elections. In the ensuing election, that incumbent won re-election by a margin of 520 electoral votes to 17. I suspect he would have won even if he hadn't cheated. That's why people say of Mr. Brady's 45-7 victory over the Colts in the deflategate game, "He's a successful quarterback, alright, but he's no Richard Nixon."
The second coming of deflategate involves the sale at auction of the football that Mr. Brady allegedly threw to Tampa Bay wide receiver Mike Evans for the latest of his touchdown passes. The football was of special value to some because, when Mr. Brady announced that he planned to retire, it became his "last touchdown" football, and it sold for $518,000. Shortly after the sale, Mr. Brady announced that he would not be retiring, deflating the value of the football considerably according to news reports.
One of my students shared this story with me, wondering if the buyer could seek rescission based on mutual mistake. My instincts are as follows, and I welcome alternative takes.
On the one hand, one could argue that the parties both believed that Tom Brady had retired and that the football in question had indeed played a part in his last touchdown. That seems like a basic assumption about a fact that had a material effect on the sale price for the item. Touchdown buyer! On the other hand, pro athletes do come out of retirement. My student pointed out that Mr. Brady had a fine season last year, and so the possibility that he might return to the sport seemed possible. Perhaps the mistake was not as to a fact but as to judgment. Touchdown seller!
Both parties likely knew that there was some possibility that Mr. Brady would return to football. Perhaps the sale price even reflected that uncertainty. But the same auction house (Lelands) sold the football involved in Mr Brady's first touchdown last year for just under $430,000. Moreover, Lelands advertised the sale as follows:
If there is any item in the field of sports collectibles that needs no embellishment, it is this historic piece: the final touchdown ball of Tom Brady’s career.
That statement seems to me to put the burden of the risk of mistake squarely on the seller, with a little help from the doctrine of equitable estoppel. The buyer was entitled to rely on the seller's representations. Touchdown buyer!
But the inquiry should not end there. We would have to look at the contractual language relating to the sale. Auction houses must be aware of the danger of counterfeits or mistakes. In this case, they must be aware of the possibility that a professional athlete will come out of retirement. Does the auction house disclaim liability associated with such risks? If so, touchdown seller!
Such disclaimers might be effective as an allocation of risk, but I think the buyer could still have an express warranty claim, as such warranties are very difficult to disclaim. Lelands advertised the item as "the final touchdown ball of Tom Brady's career." That factual claim creates a warranty, and it may turn out to be a false statement, constituting a breach of warranty. But the buyer may have to wait until next season to find out. After all, Mr. Brady might have an off year and throw no more touchdown passes. Buyer could settle for a field goal at this point, but I'm guessing if he goes for it, he's looking at a 21-14 victory.
H/T Jackson George
Thanks for chiming in, Sid! My warranty theory is getting no traction on the Twitter. I surmise that you too are skeptical that calling it his "final touchdown football" might not be a warranty that it would forever remain his final touchdown football. My inclination is to think the language was deliberately chosen to enhance sales and therefore should have binding legal effect. Otherwise, why not call it his "latest touchdown football" or his "most recent touchdown football" or even the "final (for now) touchdown football"?
You raise the interesting possibility of frustration of purpose. I had considered that possibility and rejected it, perhaps prematurely. I suppose it depends on what the buyer's purpose was. If he purchased the football for sentimental reasons, maybe. But the football is still a special football, and so if you want to own a piece of Tom Brady's career, you've got it. If he purchased the football as an investment, I would say probably not, because Mr. Brady's un-retirement was just one of infinite factors that would have affected the value of of his purchase.
What of an unjust enrichment theory? Is this a situation like Krell v. Henry, where the lessor could simply re-let the flat for the re-scheduled coronation? Can't the auction house doubly profit by selling Mr. Brady's next "final touchdown football"?
Your last sentence confuses me. Expressly allocates the risk to whom? Are you saying that seller assumes the risk of mistake by asserting that some good is the very last of its kind or are you saying that an express allocation of risk was necessary here and was (from what we can tell) lacking?
Posted by: Jeremy Telman | Mar 15, 2022 8:13:12 AM
Fascinating post Jeremy! I think the situation is unique in the law of sales. It raises all sorts of possibilities: Was the “lastness” status of the ball a warranty, along with its provenance? Should it have been made to extend to future performance (“This will forever be the last TD ball Brady threw”)? Suppose the sales contract was still executory:: would Brady’s un-retirement frustrate its basic purpose? You are clearly correct in analyzing the problem as one of risk allocation between seller and buyer. And because of the recursive nature of life and law, future contracts for the sales of the “very last X” must expressly allocate the risk that they won’t be.
Posted by: Sidney DeLong | Mar 15, 2022 7:58:10 AM