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Blts-9e Case Problem with Sample Answer Chapter 11: Consideration, Capacity, and Legality 11–7 Case Problem with Sample Answer

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BLTS-9e Case Problem with Sample Answer

Chapter 11: Consideration, Capacity, and Legality
11–7 Case Problem with Sample Answer
Under California law, a contract to manage a professional boxer must be in writing, and the manager must be licensed by the state athletic commission. Marco Antonio Barrera is a professional boxer and two-time world champion. In May 2003, José Castillo, who was not licensed by the state, orally agreed to assume Barrera’s management. He “understood” that he would be paid in accord with the “practice in the professional boxing industry, but in no case less than ten percent (10%) of the gross revenue” that Barrera generated as a boxer and through endorsements. Among other accomplishments, Castillo negotiated an exclusive promotion contract for Barrera with Golden Boy Promotions, Inc., which is owned and operated by Oscar De La Hoya. Castillo also helped Barrera settle three lawsuits and resolve unrelated tax problems so that Barrera could continue boxing. Castillo did not train Barrera, pick his opponents, or arrange his fights, however. When Barrera abruptly stopped communicating with Castillo, the latter filed a suit in a California state court against Barrera and others, alleging breach of contract. Under what circumstances is a contract with an unlicensed practitioner enforceable? Is the alleged contract in this case enforceable? Why or why not? [Castillo v. Barrera, 146 Cal. App.4th 1317, 53 Cal.Rptr.3d 494 (2 Dist. 2007)]
Sample Answer:
A contract with an unlicensed practitioner may be enforceable if a state does not expressly provide that the lack of a license prohibits the enforcement of a work-related contract. If the underlying purpose of a licensing statute is to raise revenue, then a contract with an unlicensed practitioner may be enforceable. If the statute’s underlying purpose is to protect the public from unauthorized practitioners, however, the contract is likely illegal and unenforceable. In this case, the court issued a summary judgment in favor of Barrera and the other defendants. Castillo appealed to a state intermediate appellate court, which affirmed the summary judgment on the basis, in part, that Castillo was not a licensed manager. The court reiterated that under California regulations, a contract to manage a professional boxer must be in writing and the State Athletic Commission must license the manager. The governing law has regulatory, not revenue, purposes, “one of whose primary goals is to provide safeguards for the protection of persons engaging in the activity.” Most important are the boxers, who are protected “against the temptation to mortgage their futures.” Here, the alleged management agreement between Barrera and Castillo was oral, and the state had not licensed Castillo as a boxing manager. Castillo contended that he “agreed to assume responsibility as Barrera's manager” and “played a direct role” in Barrera's boxing career, including “managing his business and personal affairs.” He negotiated a contract with Golden Boy Promotions and “played a direct and instrumental role in settlement of three lawsuits,” allowing Barrera to continue his boxing career. He “worked with an attorney to extricate Barrera from tax problems” and assisted in other activities, “which could have otherwise hampered or damaged [Barrera’s] career. In sum, Castillo's complaint alleges that he engaged in conduct falling within the statutory definition of a manager of a professional boxer.” Because “he acted as a manager without a written contract and without a license, summary judgment was properly granted.”

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