SW Legal studies in Business

Five Year Employment Contract Must State All Major Terms to Be Enforceable
Description

Appeals court held that employees’ claims of breach of a five-year employment contract, when they were fired after three years, fails because the contract did not comply with the statute of frauds. It failed to set out all material terms of the supposed agreement.

Topic Employment Law
Key Words

Employment Contract; Statute of Frauds

C A S E   S U M M A R Y
Facts

Elite Technology, a business that sells, leases and services photocopier equipment, signed agreements with Thomas and John, agreeing to employ them for five years. The contract also contained a five year covenant not to compete in the New York City metro area. Thomas and John were both fired after three years and went to work for a competitor. Elite sued, contending that Thomas and John violated the covenant not to compete. Thomas and John counterclaimed for breach of the contract because their employment did not last five years. Elite moved to dismiss the claims made by Thomas and John, but the trial court would not. Elite appealed.

Decision

Reversed. The original agreement did not meet the requirements of the statute of frauds. It did not set out all of the material terms of the alleged five-year employment contract, so the court had no objective way to understand the alleged agreement. Parol evidence may not be used to resolve the lack of clarity in the supposed employment contract. Hence, the counterclaims made by Thomas and John should be dismissed.

Citation Elite Technology v. Thomas, 894 N.Y.S.2d 420 (App. Div., N.Y., 2010)

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