Ready, Steady, No! When a contract isn’t.

“When is a contract not a Contract?” sounds more like a debate for an undergraduate seminar!

Rather, it was a question that was recently considered by an international panel of legal experts.

Driver Contract Recognition Board (CRB)

In 1991, the Federation Internationale de l’Automobile (FIA) – the World governing body for Formula One – established the Driver Contract Recognition Board (CRB) in the wake of Michael Schumacher’s controversial mid-season move from Jordan to Benetton.

The CRB is appointed by the President of the International Court of Arbitration of the International Chamber of Commerce and comprises four members of different nationalities who are “qualified lawyers of international standing and experienced in contract law”.

Its function is to provide teams with an effective dispute resolution mechanism.

What is a Contract?

A contract is a legally binding promise (written or oral) by one party to fulfil an obligation to another party in return for consideration. A basic binding contract must comprise four key elements: offer, acceptance, consideration and intent to create legal relations.

What isn’t a Contract?

Oscar Piastri (21) is an up-and-coming Australian racing driver, having won the 2021 FIA Formula 2 Championship. He was announced as the reserve driver for the Alpine F1 team in 2022.

In August 2022, Alpine parted ways with one of its lead drivers, Fernando Alonso, confident that their reserve in Piastri would step up. It transpired, however, that Piastri had already entered a Contract with McLaren on 4th July 2022 as a lead driver.

The matter was referred to the CRB:

A Tribunal appointed by the Contract Recognition Board held a meeting on 29th August 2022 when counsel for Alpine Racing Limited, McLaren Racing Limited and Mr Oscar Piastri were heard. The Tribunal has issued a Unanimous Decision that the only Contract to be recognised by the Board is the Contract between McLaren Racing Limited and Mr Piastri dated 4th July 2022. Mr Piastri is entitled to drive for McLaren Racing Limited for the 2023 and 2024 seasons. The members of the Tribunal comprised Ian Hunter QC presiding, Prof. Klaus Peter Berger, Matthieu de Boisseson and Stefano Azzali.

Decision of the Contract Recognition Board 02/09/2022

The intent of Alpine did not form a contract. The Contact between McLaren and Piastri did.

Fallout

Within minutes of the Decision, McLaren announced:

Oscar is an exciting addition to the McLaren family

McLaren Racing has signed 2021 FIA Formula 2 champion Oscar Piastri on a multi-year contract to partner Lando Norris from the 2023 FIA Formula One World Championship season.

Alpine acknowledged the Decision and commented:

We consider the matter closed on our side and will announce our full 2023 driver line-up in due course.

Comment

This case proves an expensive lesson: what you think you may have agreed to and the actual contractual position may well vary.

Have you protected your contractual position with more than a handshake?

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