## Facts

- Ken M. Stabler, then an NFL player under contract with the Oakland Raiders, signed a long-term playing contract in April 1974 with Alabama Football, Inc., a World Football League franchise.
- The agreement was “effective immediately” and provided (among other terms) that Alabama Football, Inc. would pay Stabler $50,000 upon signing and an additional $50,000 in 1974, and that Stabler would play for seven years after his Raiders contract ended for stated compensation totaling $875,000.
- The contract barred Stabler from executing any other contract with any other football franchise or team in any football league.
- Alabama Football, Inc. paid the initial $50,000 upon execution but did not timely pay the remaining $50,000 due in 1974; only $10,000 was paid on May 20, 1974.
- After Stabler requested payment of the balance, the parties agreed to a payment schedule in late June 1974; $10,000 was paid under that schedule, leaving $30,000 unpaid.
- On October 29, 1974, Alabama Football, Inc. delivered a $30,000 promissory note payable November 29, 1974; the note was not paid at maturity.
- Alabama Football, Inc. publicly used Stabler’s commitment to generate publicity, support ticket sales, and recruit other players.
- By the time of the trial-court hearing, Alabama Football, Inc. was in severe financial distress, with substantial debt and an overdrawn bank account.
- Stabler sued for declaratory and equitable relief seeking cancellation of the contract due to nonpayment and the contract’s restrictive effect on his ability to negotiate elsewhere.

## Issues

1. Whether Alabama Football, Inc.’s nonpayment of the 1974 compensation (and the unpaid promissory note) was a material breach permitting rescission of the contract.
2. Whether Stabler was required to return or tender back the money he had received as a prerequisite to rescission.
3. Whether Stabler provided sufficient notice of his election to rescind.
4. Whether, given the circumstances, rescission rather than damages was an appropriate remedy.

## Decision

- The Supreme Court of Alabama affirmed the trial court’s judgment rescinding the contract and freeing Stabler from all contractual obligations.
- The court held Alabama Football, Inc.’s failure to pay the amounts due in 1974, followed by nonpayment of the $30,000 note, constituted a material breach.
- The court concluded the company’s financial condition evidenced an inability to perform the long-term obligations of the agreement.
- The court held Stabler was not required to tender back the sums he had received before obtaining rescission, given the company’s insolvency and the substantial, nonreturnable promotional benefits it had already obtained.
- The court treated Stabler’s demands for payment and subsequent lawsuit seeking cancellation as adequate notice of rescission under the circumstances.

## Legal Principles

- A material breach of a contract, particularly one going to core consideration and coupled with an inability to perform, may justify rescission rather than limiting the nonbreaching party to damages.
- Although rescission typically requires restoration of consideration to place the parties in the status quo, equity may excuse prior tender-back when strict restoration would be unjust.
- Prior restoration may be excused where the breaching party is insolvent and has already received benefits that cannot be returned in kind (e.g., publicity and promotional value).
- An election to rescind may be shown by conduct and litigation seeking cancellation; a separate formal notice is not always required.

## Conclusion

The court affirmed rescission of a long-term, exclusive playing contract after Alabama Football, Inc. materially breached by failing to pay agreed compensation and demonstrating inability to perform, and it held that equity did not require Stabler to tender back payments received before rescission where the breaching party was insolvent and had already obtained nonreturnable promotional benefits.


Alabama Football, Inc. v. Stabler, 319 So. 2d 678 (Ala. 1975)