“Just in Case”
Time Commitment: 10 minutes if you also read Jason Fried’s post I’m responding to.
Yesterday Jason Fried of 37Signals put up a post asking: Employment contracts: What are they good for? If you haven’t read it it’s worth checking out. I responded to the post with a comment, which I’ve reproduced here:
First off, I am a lawyer, but this isn’t legal advice, and I’m not your attorney. :) Having a writing goes beyond issues of trust. At least, beyond trust of the individual. A writing is there as an affordance to human frailty. We simply aren’t very good at communicating and understanding things comprehensively, and we aren’t very good at remembering those things we do understand. So we write it down.
“Just in case” may be a weak argument, but let me try to give it a fair hearing at least before dismissing it.
A contract is just an agreement between two parties that the law will enforce. And, although there are some notable exceptions, a contract doesn’t have to be in writing to be formed. The advantages of having the agreement as a writing that’s signed are, among others:
(1) the formality of a writing assures that parties can be objectively treat as if they’ve entered an enforceable agreement, ‘just in case’ they don’t subjectively appreciate the import of what they’ve done;
(2) the agreement is memorialized in a way that’s resistant to imperfect recollection, ‘just in case’ each party later remembers the agreement differently;
(3) the parties are on notice of what the agreement is, ‘just in case’ there is a defect in either’s understanding;
(4) and the parties can override any default provisions of law that may apply, or otherwise may materially change the agreement, ‘just in case’ the defaults are unfavorable or counterintuitive.
Advantage (1) probably isn’t of much use in the employment setting because a reasonable person under the circumstances would know they’ve entered an agreement, whether or not there was a writing.
Advantage (2) is useful even when you are hiring great people. Memories fail and sometimes people harbor misunderstandings of their relationship based on bad recollection. The writing can serve as a reference to correct a misremembering.
Advantage (3) is probably the strongest. By making a writing you either resolve any misunderstandings or remove them through the ‘integration clause,’ which says that the writing comprises the entire agreement between the parties. This likewise stops problems before they start.
Advantage (4) is useful because the default provisions of law usually only come in to fill the gaps in the parties’ agreements, and without a writing there are likely more gaps to fill. And unless you’re a practicing attorney in the state where the agreement is formed and you’re familiar with the UCC, it’s hard to know what agreement you’d actually end up with once you apply the law.
The big “Just in case” though may be ‘just in case’ there is a dispute. But I contend that by having a writing you are actually decreasing the chances that a dispute arises, not just covering yourself in case it does. That goes beyond insurance.
Regarding the Backpack page, generally speaking employee handbooks are considered part of the contract between employee and employer, so you may be able to move most of the substance of the contract into a BackPack page and supplement with a simple one or two-page written agreement. You should consult your attorney about that though. I’m not licensed in Illinois yet and don’t know the rules there.
P.S. I’ll be at LessConf if you want to talk about this some more.
