Employee’s sophisticated negotiation skills may help make employment contract binding

Are you negotiating an employment contract with an applicant for a high-level position? If the applicant actively participates in that negotiation and makes counter-offers to the terms you propose, chances are a court won’t later throw out the agreement even if it includes an arbitration clause.

That’s because an applicant’s sophisticated negotiation skills will likely be seen as one factor in holding her to the terms unless they are clearly unconscionable.

Recent case: When her employer terminated her, Wilson sued for breach of contract.

The company asked the court to send the case to arbitration, pointing out that she had signed an employment contract that included an arbitration provision.

Wilson countered that the agreement was unconscionable. The court said it would toss out one section that it deemed unconscionable (because it referred to a part of the agreement that Wilson had not seen until after she signed).

However, it sent the rest of the case to arbitration.

The court reasoned that Wilson was no ingénue, but had been in the business world for many years and held many high-level positions. Plus, she had negotiated most of the contract terms herself, including her pay and benefits. She also had been able to review the agreement before signing and had been invited to ask questions.

That was enough for the court to toss out just one term, but hold her to the rest. (Farrar v. Direct Commerce, Court of Appeal of California, 2017)