Corporate & Securities Law

Don?t Send Mixed Messages

By Ken Adams

During my conversation with Dan Schwartz in connection with yesterday’s post about how to express at-will employment, Dan mentioned this post on the Minnesota Labor & Employment Law Blog, by Tiffany Schmidt of Abrams & Schmidt. It describes a Minnesota Court of Appeals case in which a school director challenged his termination. This case provides a useful cautionary tale for contract drafters.

The director and the school board in question entered into a contract that stated ?This is a general at will agreement.? (Emphasis in original.) But it also stated that it was for the work year July 1, 2008 to June 30, 2009 and that ?Positions will automatically renew for one year after one year of service unless specific actions are taken by the board before April 15th of each year.? The director was terminated on May 7, 2009.

The court held that Mr. Ellis was an at-will employee, saying as follows:

The plain language of the ?at-will? phrase overrides the general rule for construing a fixed-term contract, expressly replacing any implication that might have been drawn from the reference to start and end dates. The asserted tension between the at-will declaration and the stated dates of service does not create ambiguity.

But this has to represent something of a Pyrrhic victory for the school board, in that they would have avoided the dispute had the contract not been worded such that a reader could conclude that it provided for a one-year term, despite the at-will language. Don’t send mixed signals in your contracts!

Full post as published by AdamsDrafting on May 21, 2010 (boomark / email).