LITIGATION AND LEGISLATION
So let be written, so let it be done
Laurance Jerrold
Jacksonville, Fla
W
hen Yul Brenner banishes Charlton Heston
from Egypt in the movie The Ten Command-
ments, he utters the words that are the title of
this month's article. The saying of these words makes
a point. When you set something down in writing, it is
plain and unambiguous, and meant to be followed to
the letter: no hemming and hawing; no ifs, ands, or
buts; it is to be as it is written.
Over the years, I have reviewed hundreds of written
contracts for orthodontists; many of them were
employment contracts. Employment contracts are
usually between senior and junior, with junior working
for a period of time, hoping that at the end of the
road there is a partnership or a buyout. Seniors, on the
other hand, are looking to lighten their load, or maybe
they took over another practice or opened a satellite,
and they need some help: whatever. Often they say
that they will consider something such as a partnership
sometime down the road but only after junior has
been employed for a while, since senior wants to make
sure that junior is a good fit for the practice and treats
the patients and staff well, that junior knows what he
or she is doing, and so on.
At any rate, there is almost always a section in the
agreement that deals with the term of employment.
These terms usually run for 1 or 2 years. There is
generally some verbiage about the ability of the parties
to seek renewals when notices are sent, as well as
language dealing with termination. Almost always, there
is a phrase that says something such as “this agreement
states the full understanding of the parties and cannot
be modified except in writing and signed by both
parties.”
Goldman v White Plains Center for Nursing Care,
LLC, is an interesting case because it deals with an
occurrence that happens more often than it should
and, when it does occur, often leads to litigation. The
facts of this case show that the plaintiff was hired to
be the administrative director for the defendant for
a 2-year period. In addition, the employment contract
Am J Orthod Dentofacial Orthop 2013;143:745-6
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Copyright Ó 2013 by the American Association of Orthodontists.
http://dx.doi.org/10.1016/j.ajodo.2013.02.017
specified that the parties would “enter into good faith
negotiations with respect to renewal of the Agreement
on mutually agreeable terms” and that these
negotiations would occur “no less than nine months
before the contract was to expire.” The agreement could
be terminated on mutual consent of the parties or “by
either party giving notice to the other at least six (6)
months prior to the end of the Employment Period of
its intention not to renew this Agreement.” At the
expiration of the contract or the termination of
employment, the employer would “be released of any
responsibility or obligation hereunder, except for
payment of salary and benefits accrued to the effective
date of such expiration or termination.” Finally, the
contract represented the “entire Agreement and
understanding” of the parties and also that it “could
not be changed, modified, or amended, except by
a writing” signed by both parties.
As things would have it, the employer and the
employee got along splendidly. As the 2-year period
neared its end, neither side gave the other notice of
intent whether to continue. After the initial 2-year
period ended, the plaintiff continued to serve, and the
employer continued to employ, with agreed-upon salary
adjustments amenable to both parties, for the next
8 years. When things are good, they're good.
About this time, the employer decided to sell the
business. Part of the contract of sale was that the
purchaser agreed to an assignment and assumption
of all contracts. The plaintiff's original contract was
among the contracts presented to the purchaser.
Want to guess what happened? Three months after
taking over the business, the defendant terminated
the plaintiff's employment. The plaintiff sued, claim-
ing that her continued employment after the
expiration of the original 2-year contract gave rise to
a presumption that the parties intended to renew their
contract for successive 1-year terms. The trial court
agreed with the plaintiff. The defendant appealed.
The appellate court reversed the trial court's ruling,
stating that an implied contract for successive 1-year
periods was inconsistent with the express language
in the original employment contract. This appeal
ensued. New York's highest court upheld the appellate
court's ruling.
745
746
Common law creates a presumption that upon
expiration of an employment contract, when the parties
continue to operate as they did before but without the
benefit of a written document, the relationship is
deemed to continue for successive 1-year terms. It is
a rebuttable presumption allowing either party to show
that it did not intend to allow the original contract to
renew automatically. It cannot be for a longer term, as
might have been stated in the original contract, because
of a potential problem with the statute of frauds (a legal
doctrine outside the scope of this article). Regardless,
a fundamental rule of contract law is that agreements
are to be strictly construed as written, since the
document is the best evidence of the parties' actual
intentions. The court noted: “Thus, a written agreement
that is complete, clear and unambiguous on its face
must be enforced according to the plain meaning of
its terms, without reference to extrinsic materials outside
the four corners of the document.”
The court enumerated that (1) the original contract
contained a provision requiring the parties to renew their
intentions before the contract's expiration; (2) the
contract would end if either party gave notice of intent
not to renew at least 6 months before the expiration
of the term of employment; (3) if the contract was
allowed to expire, the employer would have no
obligations other than to pay accrued salary and benefits
as specified; and (4) the parties agreed that the contract
encompassed their entire understanding, and it could
not be changed except in a writing signed by both
parties. The court noted the well-established rule that
holds “absent an agreement establishing a fixed
duration, an employment relationship is presumed to
be a hiring at will, terminable at any time by either
party.”
In a footnote to the case, it was noted that notices of
intent not to renew not only serve varying purposes, but
also can actually benefit both parties. For instance,
senior can serve notice on junior of his intent not to
renew the employment relationship; conversely, junior
could notify senior of his intent to move on. On the
one hand, it is usually because senior just doesn't see
an extended relationship working out, but, on the other
hand, maybe junior is thinking of going out on his own
and doesn't want to be bound by a specified time
commitment. Often it is because either party or both
parties have had their eyes opened to the realities of
the relationship they thought they wanted only to
discover that maybe the best course of action is
employment at will. Addressing this in another footnote,
the court stated how easy it could have been to
circumvent the common-law rule by merely inserting
a clause noting that in the event of contract expiration
May 2013  Vol 143  Issue 5 American Journal of Orthodontics and Dentofacial Orthopedics
Litigation and legislation
without subsequent renegotiation, the employment
term reverts to either successive 1-year contracts or
employment at will, depending on what the parties
initially want.
In closing, the court stated the following.
[I]n this case, where the employer and employee
agree that the contract memorializes their under-
standing, can be modified only in writing and expires
on a specified date absent additional negotiations for
a new agreement, application of the common-law pre-
sumption would be contrary to principles of contract
interpretation and the employment-at-will doctrine.
In such a situation, the evidentiary presumption must
yield, and this should be the result regardless of
whether the contract is oral or written. We therefore
hold that the common-law rule cannot be used to
imply that there was mutual and silent assent to auto-
matic contract renewal when an agreement imposes
an express obligation on the parties to enter into
a new contract to extend the term of employment.
The court tersely held that in situations such as de-
scribed under this fact pattern the employment arrange-
ment becomes employment at will. So let it be written, . . ..
COMMENTARY
I can't tell you how many phone calls I get wherein
junior tells me “well sure, I signed it, and sure I know
what it says, but things were going along so well that
we just sort of continued the way we had been.” I get
it. Nobody wants to rock the boat when things are going
well. All too often, I hear that they continued based on
a handshake. Yes, junior would get a raise. Yes, junior
would get some if not all of whatever additional benefits
he was seeking. Yes, they agreed that someday soon, just
not now, they would sit down and talk about partnership
or buyout. In short, junior got “yessed” to death.
One main point of having a written contract is so that
the future expectations of the parties can be adequately
addressed and memorialized as memories of past discus-
sions grow cloudy with age. Also, interpretations of what
was discussed tend to get fuzzy and biased as time
passes. One's original intent can change along with
a change in the circumstances. Things change, people
change; it's just the way it is. Look at how many doctors
planned to retire until the great recession of 2008 reared
its ugly head. Yes, things change.
Contracts serve not only to keep everyone on track
regarding their expectations concerning the relationship
as it exists, but also to preserve the parties' expectations
as their relationship either moves forward or disinte-
grates. Having a written iron-clad employment contract
is kind of like having a prenup: it's nothing personal, just
business.