A contract problem

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Learning Hand
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A contract problem

Postby Learning Hand » Mon Nov 30, 2009 11:54 pm

A contract for exclusive sale of goods with promise of best efforts with a minimum base salary and 10 percent commissions for every $100 worth of goods sold. The salesman is a minor who quits because he's homesick and broke. He returns and works a few days. Minor wants his commissions for all days leading up to the most current. Employer refuses, saying he gave up his rights to commissions by quitting. Is he entitled to his commissions for his partial performance of the contract? Or under any equitable remedies?

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m311
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Re: A contract problem

Postby m311 » Tue Dec 01, 2009 12:07 am

Hypo isn't entirely clear. Did he work before he quit?
Last edited by m311 on Tue Dec 01, 2009 12:33 am, edited 2 times in total.

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Learning Hand
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Re: A contract problem

Postby Learning Hand » Tue Dec 01, 2009 12:08 am

m311 wrote:Hypo isn't entirely clear. Did he work before he quit?

Yes.

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m311
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Re: A contract problem

Postby m311 » Tue Dec 01, 2009 12:33 am

xxx
Last edited by m311 on Tue Dec 01, 2009 2:37 am, edited 2 times in total.

freegaladvice
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Re: A contract problem

Postby freegaladvice » Tue Dec 01, 2009 12:46 am

m311 wrote:Employee did technically probably materially breach the overall contract if he quit before something like the halfway point.


Disregarding everything else you posted--what?

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m311
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Re: A contract problem

Postby m311 » Tue Dec 01, 2009 12:49 am

Bad grammar yes, but what do you find confusing about that?

I believe when there's only a quantity term (quality not an issue) the general rule is that material breach = not doing half.

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reasonable_man
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Re: A contract problem

Postby reasonable_man » Tue Dec 01, 2009 12:51 am

Which side hired me?

freegaladvice
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Re: A contract problem

Postby freegaladvice » Tue Dec 01, 2009 1:31 am

I'm way too lazy to argue, but your analysis seems like a conclusory argument, rather than using conclusive evidence to guide your conclusion. It could just be a difference in the way we respond to exam questions--I don't think the issues you pointed to are the most relevant or dispositive to the issue(s). I know it's rude not to offer my thoughts on what I think are the most relevant, but its been a long day.

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m311
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Re: A contract problem

Postby m311 » Tue Dec 01, 2009 1:45 am

Reading the hypo again I see I forgot the base salary and the exclusive right. I'm pretty sure OP's been editing his post. Anyway, in that light,

Effectively the contract is divisible into two parts:
1) salary for work done (not including sales)
2) standing unilateral offer to pay $10, accepted each time employee sells $100 worth of goods.

If no period of time for the contract- at will employment

Either can terminate it at their will without breaching. At-will employment contract. Employee terminates it when he quits. When he returns he implicitly offers the same deal, and employer implicitly agrees. Employer then terminates the second contract and breaches both contracts by refusing to pay the commission. Employee can sue for 10% of all his sales (rounded down to the nearest hundred), and salary for all days worked. He did not breach, so nothing is subtracted from that amount.

If there was a period of time specified

It was not an at-will employment contract. Default rule is that contracts for wage earners are divisible into periods determined by statute or custom unless there was an agreement between the parties otherwise.

If payment was to come at the end

Salary part of the contract not divisible. There, if employee materially breached (I think by not doing at least half of the time period contracted for), employer has no salary-paying duties at all under the contract. Employee can only sue under quasi-contract for restitution damages, less damages employer suffered due to employee's breach (for his first period of work). However the sales and commissions probably would be deemed divisible from the contract. The employer's value of each $100 sold does roughly correspond to $10 regardless of whether the overall contract was performed. So employee recovers his expectation interest for those.

For the second period of work, the court may find either that no time was specified, so the analysis for the at-will employment contract in my first paragraph applies, or that the date the first contract was to end was implied, in which case employer anticipatorily breached by clearly refusing to pay a basic part of the agreement. Employee must then stop working to not incur avoidable damages, and can immediately cancel the contract and sue for expectation damages.

If periodic salary payments are determined to be applicable

Essentially you have a series of smaller contracts (let's say weekly). For each week employee substantially performed, employer has a duty to pay salary. When employee quit, he may or may not have materially breached that week's mini-contract, excusing employer's salary-paying duties for that week. But for each week he did substantially perform, employer has a duty to pay expected interest for salary. Commissions still divisible and always recoverable.

When employee returns and works for a few days here, he probably materially breached the second contract since a few days is less than a week (if that's the time period the court finds most appropriate).

Relevance of the exclusive right to sell

Implies employer suffered damages if ever and whenever the employee breached, which are recoverable only as a subtraction of the damages employee tries to collect because only the employee, as an infant, can bring suit.

*We didn't cover UCC so there may be something in that contradicting me.

**Hypo pretty vague so lots of other lines of analysis you can branch off into- like whether the infant affirmatively misled employer into thinking his was at the age of majority.

GZL
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Re: A contract problem

Postby GZL » Sun Apr 25, 2010 10:59 pm

Learning Hand wrote:A contract for exclusive sale of goods with promise of best efforts with a minimum base salary and 10 percent commissions for every $100 worth of goods sold. The salesman is a minor who quits because he's homesick and broke. He returns and works a few days. Minor wants his commissions for all days leading up to the most current. Employer refuses, saying he gave up his rights to commissions by quitting. Is he entitled to his commissions for his partial performance of the contract? Or under any equitable remedies?



Bored from studying and looking through past, long-dead posts to offer my pointless $.02.... but I see another issue in this frustratingly vague hypo. Even without the issue of the divisibility of the contract, the employer, in allowing the minor to come back and work, may have very much screwed himself. In allowing the minor to return to work, his acceptance of continued performance may have acted as either a) a nullification of the minor's repudiation if his quitting is construed as such or b) a promise to continue performance despite the non-occurrence of a condition on which that performance became due, or both.

If Employer is refusing to pay when that payment is due (i.e. a pay day) the minor may now have a claim for total breach. Any claim the employer had left would only be for damages in partial breach.

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mikeytwoshoes
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Re: A contract problem

Postby mikeytwoshoes » Mon Apr 26, 2010 12:33 pm

m311 wrote:Reading the hypo again I see I forgot the base salary and the exclusive right. I'm pretty sure OP's been editing his post. Anyway, in that light,

Effectively the contract is divisible into two parts:
1) salary for work done (not including sales)
2) standing unilateral offer to pay $10, accepted each time employee sells $100 worth of goods.

Therefor, eleventy-bazillion contracts are formed. It is impossible for it to be 1 bilateral K for employment with two modes of payment.




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