The odd contractual dispute between Kansas State University (“K-State”) and former head football coach Ron Prince (“Prince”) has ended in a settlement with Prince receiving a lump sum payment of $1.65 million. The dispute arose in 2009 when K-State discovered a memorandum of understanding (“MOU”) between Prince and K-State that was created by former athletics director Bob Krause (“Krause”). The MOU called for Prince to receive $3.2 million in deferred compensation. Former K-State President Jon Wefald insisted he was not aware of the agreement. Shortly after discovery of the MOU, K-State filed suit seeking invalidation of the MOU.
K-State’s central argument was that Krause did not have authority to execute the MOU without university approval. This is a touchy argument, because general agency law indicates that an agent in Krause’s position (i.e., CEO of the athletics department) would have authority to contract and bind his employer. However, K-State may have certain policies or requirements that specifically state otherwise. Thus, the question comes down to traditional agency principles of actual authority and apparent authority. Now, the legal gymnastics is unnecessary as a result of the settlement. According to Prince’s agent, Neil Cornrich, Prince is very excited about the terms of the agreement. Additionally, the settlement agreement includes a statement that “Neither the University nor K-State Athletics contends or believes that in negotiating his employment agreement or MOU (memorandum of understanding), Coach Prince engaged in any wrongful or unethical conduct. Discovery has demonstrated that this situation was not of Coach Prince’s making.” Simply, Prince was cleared of all wrongdoing.