How the Legal Wording of a Unilateral Extension Option Clause Can Determine Your Career

Vlad Herescu
Oct 29
3 min read

On April 5, 2024, the FIFA Dispute Resolution Chamber (DRC) issued a decision in favor of footballer Hildeberto José Morgado Pereira against his former club Henan F.C.The player claimed a breach of contract and sought €670,000 in compensation after the club disputed the automatic extension of his contract.

This case underscores how the wording of extension clauses can dramatically influence a player’s career, emphasizing the need for agents to carefully review and negotiate mutually agreed terms.Understanding how the DRC interprets these clauses helps agents develop stronger negotiation tactics and better risk assessments for their clients.

FIFA’s Legal Framework

This decision aligns with FIFA’s Regulations on the Status and Transfer of Players (RSTP), which govern contractual obligations and extensions.According to FIFA, any party invoking a contractual obligation must prove that the condition triggering it has been fulfilled.Extensions must therefore be based on mutual consent and clear, objective performance criteria.

In this case, Morgado Pereira argued that he fulfilled his contract’s condition — playing in over 50% of the season’s games — which the DRC recognized as an objective and valid criterion.

Background of the Case

Contract Dispute

Morgado Pereira and Henan F.C. disagreed over the automatic renewal of his contract.The player asserted that his consistent on-field performance during the 2023 season met the extension condition.

Player’s Claim

He presented evidence, including WhatsApp messages, suggesting the club had verbally agreed to the extension, and argued that he had played more than 50% of the matches, triggering the renewal clause.

Club’s Defense

Henan F.C. contended that the contract had expired and that the extension clause was invalid because it was unilateral (potestative) — dependent only on the club’s discretion.They referenced previous DRC rulings that found such clauses invalid due to the lack of mutual consent.

The DRC, however, distinguished this case from earlier examples, noting that Pereira’s clause was tied to objective performance criteria, not subjective discretion.

The DRC’s Decision

The Chamber ruled that the clause was valid and enforceable, as it relied on measurable conditions (game participation) rather than unilateral will.It determined that the club breached its contractual obligations and ordered compensation to the player.

Henan F.C. was required to pay €544,000, representing the residual value of the contract (€670,000) minus the €126,000Pereira earned at his new club — a standard mitigation deduction.The club also had to cover all legal costs associated with the proceedings.

Expert Commentary – Patrick Poldervaart

“Given this decision, clubs and lawyers should draft extension clauses using objective, quantifiable criteria, ensuring clarity and fairness for both sides.For example:

‘This contract will automatically extend for an additional year if the player participates in at least 60% of official matches during the season.’

Such drafting promotes transparency and reduces disputes while aligning with the DRC’s emphasis on fairness and data-driven evaluation.”

The Concept of Mitigated Compensation

Under FIFA’s framework, mitigated compensation reduces the amount owed when the injured party (usually a player) finds new employment after an unjust contract termination.Earnings from a new club are deducted from the original compensation claim.

Example Calculation

Original contract value: €670,000
Income from new club: €126,000
Final awarded compensation: €544,000

Agents should carefully document their clients’ job search and income to ensure accurate and fair calculations in potential disputes.

Practical Implications for Agents

Always negotiate mutual extension clauses — avoid potestative wording.
Define measurable performance metrics like appearances, minutes played, or goals scored.
Document communication (emails, messages) to prove consent and compliance.
Understand mitigation rules to optimize client compensation after disputes.

Conclusion

The Morgado Pereira case sets an important precedent for contract drafting in professional football.The DRC reaffirmed that clarity, objectivity, and fairness are non-negotiable in contract extensions.For players and agents, this decision is a reminder that even a single sentence in a contract can determine the course of a career.

📺 Knowledge Clip:For a detailed explanation of how mitigated compensation is applied and calculated, watch our latest video:👉 Instagram: @forefront_legal