 Three things are necessary in order for there to be a contract: an offer, acceptance and consideration  Consideration is something promised mutually between the parties (I will work for you if you pay me $11.00 per hour)  Written contracts reduce the risk of misunderstandings, outline party obligations, provide agreement on contentious issues and reduce uncertainty, eliminate or decrease litigation  If terms are missing from a contract the court will impose implied terms that the parties would likely have agreed upon

 An example of an implied contract term would be to assume a reasonable notice period on termination if none already exists COMMON CONTRACT TERMS  Contracts should be customized to reflect the concerns most important to the employer  Key terms should include a description, start date, name of the parties, duration, compensation and a termination clause  The higher the level of skill, education, experience, etc required the more sophisticated the contract will need to be

 Job Description – clarifies the expectations and duties – be careful about concrete language  Remuneration – must meet the minimum statutory requirements or it is void, no obligation to mention raises, bonuses, etc  Term – will indicate if there is a fixed period of time or whether it is for completion of a specific task – this eliminates the need for notice but it cannot be used repeatedly and if there is expiry and the employment continues the term automatically becomes indefinite

 Termination – important to use in order to avoid imposition of the generous common law rules for notice, must comply with minimum statutory requirements, use clear language, bring it to the employees attention, consider defining “just cause”, outline method of payment and include a duty to mitigate  Probationary Period – allows an employer time to evaluate the new employee and not have to commit to permanent hire, this does not exist in common law and must be expressly provided for by written contract, usually 3-6 months, ESA provides a requirement for notice after 3 months have passed

 Relocation – if there is potential for transfer to another location this should be written into the contract to avoid dispute, if it is not in the agreement the employee will not have to go  Benefits – should list any insurance or other benefits and how same are disposed of on termination of the contract  Restrictive Covenants – clauses to protect business interests by limiting what employees can do during and after the employment contract, including non-disclosure clauses to protect confidential information, non- solicitation clauses to protect client base and non-competition clauses

NOTE – courts do not like non-solicitation and non-competition clauses which may affect an employees ability to earn a livelihood in their area of expertise. These types of clauses should be limited in time period and geographical area in order to be upheld by a court  Ownership of Intellectual Property – confirms that property created by the employee during the contract is owned by the employer  Choice of Law – providing the jurisdiction under which the contract will be governed

 Corporate Policies – a clause confirming the employee will be bound by the employer’s policies which are usually outlined in an employee manual or attached to the contract  Entire Agreement Clause – a clause stating the written contract constitutes the full agreement and previous discussions or negotiations are not binding  Inducement – a clause that will recognize whether work with a previous employer will be recognized for notice/severance purposes

 Independent Legal Advice – a clause stating the employee has had the opportunity to seek legal advice prior to signing the contract – helps to ensure it will be difficult to challenge the terms of a contract at a later date  Severability Clause – a clause that allows the contract to stand even if a court invalidates one of the clauses. The remainder of the agreement would still be enforceable  Golden Parachute – a clause which allows for substantial compensation for executives if the company is bought out

MAIN ISSUES WITH CONTRACTS  Lack of Consideration – usually this means the promise of payment in return for the performance of work. Problems will arise if the employee starts working before the contract is signed  Unequal Bargaining Power – courts will be sympathetic if the contract is unreasonably one-sided, the employee did not understand the terms or was pressured to sign it

 Obsolescence – if there has been a change in circumstance to render the contract obsolete (changes in position, long passage of time)  Failure to Meet Minimum Statutory Standards – contracts must comply with the ESA at the very least or it will become void  Use of Ambiguous Language – if a term can have two interpretations the court will interpret it AGAINST the party which drafted the agreement because they are the one who could have avoided the problem “contra proferentum”