## Facts

- Ralph Neely, a senior football player at the University of Oklahoma, was a highly sought college athlete as the NFL and AFL competed to sign graduating players.
- On November 28, 1964, the Houston Oilers (AFL) obtained AFL draft rights to Neely; the Baltimore Colts (NFL) obtained NFL draft rights, later traded to the Dallas Cowboys.
- On December 1, 1964, Neely signed written AFL standard player contracts with Houston for the 1965–1968 seasons, including a “no-cut” clause, and received a $25,000 bonus check.
- Neely wanted the signing kept secret so he could remain eligible to play in a January 2, 1965 bowl game; AFL rules required filing the contract with the league within ten days.
- After learning of Dallas’s interest and engaging in discussions through his father-in-law, Neely told Houston he was withdrawing, returned the contracts and bonus check, and signed a four-year contract with Dallas on December 31, 1964.
- Houston sued in federal district court for a declaration that its contract was enforceable and for an injunction barring Neely from playing for any other professional team.
- The district court denied relief, finding the contract “tainted with fraud” and unenforceable under the Texas Statute of Frauds.

## Issues

1. Whether the Oilers–Neely contracts were voidable for fraud based on alleged misrepresentations or promises about secrecy and timing of effectiveness or filing.
2. Whether the contracts were unenforceable under the Texas Statute of Frauds.
3. Whether equitable defenses, including unclean hands based on concealment aimed at preserving college eligibility, barred injunctive relief.
4. Whether a court may enforce a professional athlete’s personal services contract by issuing a negative injunction preventing play for competing teams during the contract term.

## Decision

- The Tenth Circuit reversed the district court and remanded with instructions to grant the requested injunction.
- The court held the written, signed contracts were valid and enforceable and were not proven to be procured by actionable fraud.
- The court held the Texas Statute of Frauds did not bar enforcement because the agreements were written, definite, and signed by Neely.
- The court rejected unclean-hands and related equitable defenses, concluding the conduct alleged did not bar equitable relief.
- The court directed entry of an injunction restraining Neely from playing professional football for any team other than Houston during the contract term.

## Legal Principles

- A clear, written, signed multi-year contract that states material terms and is supported by consideration is enforceable absent proof of material misrepresentation inducing execution.
- Alleged side understandings about secrecy or disclosure, when not unlawful and not negating assent to the contract’s essential terms, do not establish fraud sufficient to rescind an otherwise definite written agreement.
- The statute of frauds defense fails where the contract is in writing, specifies the term and compensation, and is signed by the party to be charged.
- Unclean hands bars equitable relief only for conduct that is unlawful or inequitable and sufficiently related to the claim for relief.
- Although courts generally will not order affirmative specific performance of personal services, they may enforce a valid personal services contract through a negative injunction preventing performance for competitors during the contract period.

## Conclusion

The court enforced Houston’s multi-year player contracts with Neely, finding no actionable fraud, no statute-of-frauds defect, and no equitable bar, and ordered a negative injunction preventing Neely from playing for another professional team during the contracts’ term.


Houston Oilers, Inc. v. Neely, 361 F.2d 36 (10th Cir. 1966)