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Contract conundrum: Pay lawyer now, or pay employee later?

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in Human Resources

Confusing contract language did not cost a New Jersey car dealer millions of dollars, but in this economy, who can afford to lose even a little?

When Atlantic City Chrysler-Plymouth hired Jeffrey Norton as a service manager, it agreed to pay him $1,000 per month plus a commission equal to 4.5% of his department’s gross profit.

The contract also allowed for bonuses, but stated that, for any month in which a bonus was due, Norton had to be employed during the entire month to receive it.

When the dealership terminated him on Sept. 20, 2007, it paid him his salary, but no commission or bonus. Norton sued, claiming the end-of-month requirement applied only to his bonuses, not commission.

The dealership claimed it used the terms interchangeably in the contract. The court examined the contract and concluded that the only reason for using both terms would be because they are two distinct things. Consequently, the dealership owed Norton $5,822.81.

Note: Contract law says any ambiguity in a contract is construed against the party who wrote the contract. That’s why writing a contract isn’t a do-it-yourself project. Leave that to the pros—your attorneys. The few dollars you save by writing the contract yourself will probably be dwarfed by legal costs if someone sues you over ambiguous language. 

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