After negotiations to open a new restaurant, a company gave chef Roland Schnider a final draft of a three-year employment agreement that covered salary, benefits, bonuses and an ownership interest in the venture. Neither Schnider nor the company owners signed the document.
Schnider went to work immediately, but four months after the restaurant opened the company cut his salary by a third. The next month it fired him. The company offered a one-month severance payment in return for a general release from claims, but Schnider went to court instead.
The company argued that it couldn't be held to the contract because it wasn't signed. Tough beans, said the court. In handing the victory to Schnider, the Tennessee Court of Appeals decided the employer breached an oral contract. (Schnider v. Carlisle Corp., No. W2000-01695-COA-R3-CV, Tenn. Ct. App., 2001)
Advice: Be careful what you say and put in print. A court may decide to enforce an oral agreement even without a signed contract.
Generally, an oral employment contract that cannot be performed within one year is not binding. But in this case, the employer appeared to be following the terms of the unsigned draft. In addition to its initial payments to Schnider, the company listed him as a partial owner of the restaurant on documents sent to a state agency.