Chess tournaments and the Law of Contracts

Warning: due to the subject matter, this is going to be a long post.

Firstly I must state that I am not a qualified lawyer although I have studied and sat (and passed!) a paper on contract law as part of my accountancy studies. It does not make me an expert so my disclaimer follows.

Disclaimer: My opinions here are my opinions only and in no way should anyone take the contents of this post as legal advice.

If there are any law practitioners reading this post, I will be happy to hear you point out any errors I made.

Your rights as a chess participant
How many times you have participated in tournaments where the organizer/arbiter act like God? They are like judges in a courtroom, their powers are not to be questioned. Their attitude is "my tournament, my rules".

Chess players are always an aggrieved and powerless lot. They are always at the mercy of organizers/arbiters/officials actions and rulings. Some these rulings even seem arbitrary. Yet chess players do not have any recourse against such actions.

Maybe some of you might not even know you have any rights until now. Here I want to give everyone some food for thought about your rights.  I am going to discuss about chess organizers and whether their actions are legal under the Law of Contracts.

Before we start, we need a basic understanding of the Law of Contracts.

Invitation to Treat

We must distinguish between a contract and an "invitation to treat". An invitation to treat is an expression of willingness to negotiate a contract. It is an offer that is non binding.

A good example is the display of goods in a shop window. The shop owner is inviting you into his shop. You see the goods on display, maybe you feel like buying something. You walk into the shop. The shop owner does not like your face and refuses to sell you anything. Does he have this right?  If you open a shop, can you refuse to sell your goods?

The answer is YES, because there is no contract yet. The display is an invitation. You go in and OFFER to pay for the goods at the amount advertised. The shop owner ACCEPTS your offer and the transaction is completed. Most people will be thinking it is the other way round but it is not - at least this is what I learnt, any legal practitional is most welcome to correct me here.

Other examples are the advertisement of a price, invitation for tenders or auction, invitation to apply for shares etc. Usually these invitations will come with some terms attached for example, subject to stock availability, and in tenders a disclaimer that the right not to accept any tender. In the case of an auction there may be a reserve price and if the highest bid does not meet this price, then the auctioneer need not sell.

Contracts

A contract is a binding agreement between two or more parties. There must be an offer and an acceptance and a mutual understanding (meeting of the minds) of the terms of the contract.

You offer and I accept to buy a car from you at the price of one thousand dollars - a contract is formed. On delivery, I found that the car is actually two half-cuts joined together (side note: this does happen in Malaysia, so be carefully if you are buying a second-hand car!). I can dispute and demand my money back, if necessary by going to court - a sane man expects to buy a whole car, therefore there is no meeting of minds.

Consideration

There must be something of value to each party. This can be monetary or something of value. It does not matter if the perceived value is not the real value. You sell me your car for one thousand dollars. Later I found that the market value is only five hundred. The contract is still valid. This is caveat emptor or "let the buyer beware"

Proton Holdings Bhd (Malaysian car manufacturer) famously sold MV Augusta (a motorcycle maker, which they originally bought for 70 million Euro) for one euro. The Malaysian public is incensed. Why one Euro? Might as well give it away , right?

The answer is that they could not give it away for nothing (no consideration). They have to sell it for one Euro,  otherwise the contract could be considered non binding. This is known as nominal consideration.

Consideration is not necessary monetary. You go to a car wash, pay money and get back a clean car. The clean car is your consideration.

Delivery and Performance

You agree to sell and I agree to buy your car for one thousand dollars (a contract is made). You drive the car to my house and hand over the keys to me (delivery). I pay you one thousand dollars (performance). If I do not pay you, I am in breach of contract.

Legality of contract

I pay you one thousand dollars to kill X. You take the money but do not perform your part. I take you to court for not living up to your end of the contract. The judge throws out the case as this contract is not enforceable by law since it involves murder which is an illegal act. Not only did I lose the case, the police are waiting outside to take me into custody.

You promise your girlfriend you will marry her. Based on this, the two of you consumate the deal (think what you want). Months later, you still refuse to marry her. She sues you for breach of contract for one million dollars. Lesson learn: contracts can be oral.

What's chess got to do with it?

The first question is whether a chess tournament, the participants and the organizers are entering into a valid contract. Let me put forward a few scenarios

Scenario 1
Someone advertises to hold a chess tournament, Entry fee is twenty-five ringgit, there are three prizes five , three and two hundred. The tournament is open to all those without a FIDE rating.

By advertising the tournament whether on a website or by email or other means, the organizer is making an offer to treat. If a player shows up at the tournament with the intention to take part, this is an intention to accept the offer. The entry fees and the prize money are the considerations to this contract.

If I were to show up and try to enter the tournament, the organizer can refuse to accept my entry. This is because the advertisement is an offer to treat , not a contract yet.

But suppose the organizer accepts my entry by taking my twenty ringgit and puts my name in the list of participants. This forms a valid contract between the tournament organizer and me. I am paired every round and I even win the tournament half a point ahead of the nearest participant.

At the prize giving, I am not named the winner. The organizer claimed that I have a FIDE rating and the tournament rules specifically excludes me from partipating. Instead the first prize is given to someone
else.

I have paid the entry (consideration). I have completed the tournament ahead of everyone (performance). The organizer did not award the first prize to me (non performance). This is breach of contract and if I were to take this case to a court of law, I believe I have excellent chances of winning.

Scenario 2

Someone advertises to hold a chess tournament, Entry fee is twenty-five ringgit, there are three prizes five , three and two hundred.

I show up at the tournament venue at the said time. I'm the only one there, organizers say the touranment is cancelled and goes home.

Scenario 3

Someone advertises to hold a chess tournament, Entry fee is twenty-five ringgit, there are three prizes five , three and two hundred.

I show up at the tournament venue at the said time. The number of players is only ten (organizer will lose money since the entry fee cannot support the prize fund advertised). Organizers revise the prize to one hundred, fifty and thirty ringgit.

For both scenario 2 and 3, the organizers have this right. Now, most of you might disagree with me. The commonest argument will be that the organizers cannot simply cancel or change the prize fund at their whim.

There cannot be a contract between the organizer and player in both scenarios because there has been no consideration until the organizer accepts the player's entry fees. As long as the organizer have not accepted any fees, they have the right to change the conditions, even to the extent of cancelling the tournament altogether.

However, if entry fees are accepted then the person who have paid the fees (and the organizers accepted it) have the right to object to any changes.

Scenario 4

Someone advertises to hold a chess tournament, Entry fee is twenty-five ringgit, there are three prizes five , three and two hundred. The tournament is six rounds on Sunday , 4th April 2010.

I send in my entry with twenty-five ringgit entry fees. On 29th March 2010, the organizer announces that the tournament has been postponed to 11th April 2010. I happen to be out of town on that day. I insist that the tournament be held on 4th April. The organizer does not comply and I take the case to court.

Scenario 5


Someone advertises to hold a chess tournament, Entry fee is twenty-five ringgit, there are three prizes five , three and two hundred. The tournament is six rounds on Sunday , 4th April 2010.

I send in my entry with twenty-five ringgit entry fees. On the day of the tournament over a hundred players turn up. The organizer changes the number of rounds to nine to accomodate the large number of participants. I think my chances are better with a six round tournament and I protest against the change.

For both scenario 4 and 5, I am within my rights. After the contract has been made between the organizer and me, the terms cannot be changed without my agreement. This relates to the prize fund, tournament schedule, number of rounds, entry fees and anything else that has been advertised beforehand.

Scenario 6

Scenario six is not a scenario but a really happened. In late 1980's , Peter Long showed up at a tournament organized by Latiff who refused him entry. Peter demanded a reason, eventually Latiff told him that there was a ban on him (Peter).

The kicker of this story. Peter wanted to know why he was not informed of the ban and Latiff replied that is was a "secret ban". I found that so funny because "secret ban" should be added to this list of oxymorons

Unfortunately, it is true that anyone can be denied entry at the organizer's discretion, just like the shop owner example I gave above.

The End
If you protest too much, most organizers think that they can just refund your entry fees and that is the end of the matter. In actual fact, you do not have to accept it but most of us will because it is not worth the trouble to pursue.

On an ending note, I just want to point out that we do not need to go to court for such small matters. In Malaysia (and most countries), there is a Consumer or Small Claims Tribunal. You do not even need a lawyer. For a small fee ( I think fifteen ringgit or thereabouts) you can bring your claim to the tribunal for hearing. This advice is only if you got cheated on purchases etc, not for claims against chess organizers!