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Teach boss to hold his tongue; oral pacts may be binding

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in Hiring,Human Resources

Just because a deal is not written down, that doesn’t mean it’s not enforceable. Oral agreements can be binding contracts in New York under certain conditions, as one Tony Award-nominated theater company learned in March.

Avoid hiring ambiguity by including language in job applications clearly stating that employment is at-will and noncontractual. Then have all candidates sign an application. Just be sure you have an attorney review the application to make sure it contains a rock-solid contract disclaimer.

Recent case: Anna Pearce, known on stage and screen as Patty Duke, was approached by a New York theater producer about the possibility of touring with a play written by the same playwright who authored The Miracle Worker, the 1962 Broadway production that catapulted Duke to fame.

Duke, through her agent, reached a tentative agreement that she would star in the play, Golda’s Balcony, as Israeli Prime Minister Golda Meir. The agreement called for Duke to be paid $25,000 per week while the play was on tour, and the actress began rehearsing. No written contract was signed, but Duke’s image was used in promotional advertising.

However, a month earlier Duke had had heart-bypass surgery. When she mentioned this to the producer, he concluded she was disabled and told his attorney to “divest” Duke. Valerie Harper was hired to replace her.

Duke sued, alleging breach of contract. The federal court ordered a trial after explaining that oral agreements are binding in New York if certain conditions are met, including evidence that the parties had an agreement.

In this case, the evidence showed that they did—they had agreed to a salary and both sides proceeded as if they had an agreement: Duke by learning her lines and the producer by promoting Duke’s name. (Pearce v. Manhattan Ensemble Theater, No. 06-CIV-1535, SD NY, 2007)  

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