The Dangers Of Do It Yourself Employment Agreements

posted by Mark Santagata January 16, 2015

Contracts can be deceptively simple in concept. Two parties come to an agreement and reduce their understanding to writing. Nothing is more basic, so often people with good intentions and no legal training attempt to memorialize their accord without the assistance of an attorney. It is when problems arise between the parties, or questions are raised about what each side intended that the limitations of home-made documents come back to haunt the drafters.

Recently the Connecticut Supreme Court dealt with an employer and employee who guaranteed themselves years of litigation by attempting to create their own employment contract. Both parties had their individual interpretations of the document they created, but until they faced each other in court neither realized the extent to which those interpretations were completely dissimilar.

The agreement was a handwritten list of compensation terms that included the statement: “This will cover the 36 month period starting April 1, 2007 and ending March 31, 2010.” The agreement contained no provision describing how the employee could be terminated.

The employee, Norma Cruz, was terminated in 2008 and sued for breach of the agreement. Cruz argued that the agreement she created with her employer, Visual Perceptions, guaranteed her three years of employment. The employer maintained that there was no intent to guarantee Cruz employment; she was an employee at will who could be terminated by the company at any time.

During the trial Cruz described how she had prepared notes in advance of the meeting with her employer that resulted in the agreement. Cruz’ notes dealt with issues of compensation, not with the duration of her employment. When the employer testified he stated that the three year term referred to in the agreement was intended to relate to Cruz’ compensation not a guarantee of how long she would be employed by the company.

The trial court relied on what had been reduced to writing, and adopted the interpretation given to that writing by Cruz and her attorneys. It found that a three-year contract existed. Cruz received an award based on the employer’s breach of the agreement.

The employer appealed maintaining that it never intended the written notation to be a three year contract. The appellate court agreed with the trial court and found that the contract bound the employer to keep Cruz employed for three years, despite the employer’s argument that merely setting the term for Cruz’ compensation in the contract did not reflect an intent to guarantee her employment.

The employer appealed again, taking the case to the Connecticut Supreme Court. The court distilled the case to a simple question: did the agreement plainly and unambiguously reflect an intent to create an employment contract for a definite period. The Supreme Court reached a different conclusion than the lower courts and found the agreement to be so ambiguous that the trial court needed to look beyond the language in the contract to determine what the parties intended.

According to the court the way Cruz and her employer had drafted the agreement it could be interpreted as either a contract to create a three-year term of employment or an agreement that could be ended at any time. What the parties produced was confusion on paper. The only way to decipher the contract was to examine the circumstances surrounding the creation of the document, which would have to be done at a new trial. The Supreme Court therefore ordered Cruz and Visual Perceptions to retry the case and requested the trial court to examine evidence that had not been considered during the first trial.

The Cruz case is a cautionary tale for anyone attempting to draft something as potentially contentious as an employment contract without consulting legal counsel. The value of an attorney’s skill in drafting a thorough and unambiguous contract is artfully placing the intent of the parties on paper and anticipating the possible points of conflict in advance of a dispute. As the Cruz litigants enter round four of a difficult and costly litigation process both would likely appreciate an opportunity to return to the table where the contract was created so that what they intended could be more carefully and accurately recorded.

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