ESPNsoccernet understands there is ambiguity over Fabio Capello's contractual right to name the England captain.
Capello is to hold talks with the Football Association this week after he expressed his objections to Terry being stripped of the armband as he awaits the outcome of his July court case.
The FA does have the right to exclude one player of its choosing from Capello's squad, but ESPNsoccernet insiders privy to the contract say Capello is not in breach of the contract by speaking out over the Terry decision. Indeed, a legal loophole means Capello may even be within his rights to contest the decision and reinstate the Chelsea defender.
Whether the Italian would pursue that course of action is open to some doubt - such a course of action would surely stretch his relationship with the FA to breaking point - and it appears more likely that there will be some kind of pact between the two parties.
Even so, it would seem the wording of the lavish £6 million-a-year contract holds the key to the issue. The source suggests that the FA has the right to choose one player who, in its view, should not be in the squad: "The clause is very long and generally it has to be a sound reason. For example, it could be on ethical, political or moral grounds, although those are not necessarily the words used in the contract to explain the reason why. It is, therefore, not so clear whether that choice of one player includes the captain."
ESPNsoccernet has put its findings to the FA, but it was made clear that there will be no comment on any aspect of Capello's contract that the body considers to be a private matter between the manager and his employers.