Amidst the hustle and bustle of running a business or earning a living, paperwork formalities sometimes get pushed to the side, and non-competes don’t get signed, or don’t get signed until after the employee has already started work (thereby creating issues of consideration and enforceability). Those who work in the employment law arena can all share stories of belatedly discovered paperwork defects that ultimately proved dispositive.

A recent case out of Texas provides a good lesson about workplace paperwork formalities. In Holloway v. Dekkers and Twin Lakes Golf Course, Inc., a Texas appellate court ruled that a one-year employment agreement that was not signed by the employer fell within the statute of frauds and was therefore unenforceable. In that case, Clay Holloway was hired by Gideon Dekkers to be the head golf professional at Twin Lakes Golf Course. During July 2008, the parties first met in person, and subsequently communicated via phone and email, eventually agreeing that Holloway would be employed for a one-year period. The parties also agreed to negotiate an extension prior to the expiration of the initial one-year period dependent upon Holloway’s performance review. Holloway subsequently began work on August 5, 2008 before he signed an employment agreement.

Less than a week later, Holloway was presented with an agreement (prepared by Dekkers’ daughter-in-law) dated July 23, 2008, which provided for a “[y]early contract that will be up for renewal after annual performance evaluation.” Holloway signed the agreement, but never presented it to anyone from Twin Lakes to sign. Holloway was then terminated on September 30, 2008, and subsequently filed suit against both Dekkers and Twin Lakes for breach of contract and fraud in the inducement. After the trial court entered summary judgment for Twin Lakes, Holloway appealed.

On appeal, the court reviewed the statute of frauds, and stated that “when a promise or agreement, either by its terms or by the nature of the required acts, cannot be completed within one year, it falls within the statute of frauds and is not enforceable unless it is in writing and signed by the person to be charged.” The court noted that the contract was dated July 23, 2008 and Holloway’s performance could not be completed for over a year from the date of the contract. Additionally, Holloway’s deposition testimony demonstrated he understood his employment would last from August 5, 2008 to at least August 5, 2009, or a period of 366 days.

Holloway argued that because it was necessary for his performance review to occur prior to the expiration of the one-year employment term, the agreement could have been completed within one year. However, the court concluded that the one-year term was not contingent upon his performance review. Instead, the performance review was to determine a possible extension. Therefore, the court concluded there was no way the agreement could be performed within one year, and because Twin Lakes (the party to be charged) did not sign an agreement, any agreement between the parties was unenforceable.

Despite the favorable outcome for the employer, this case should serve as a reminder to employers everywhere not to ignore paperwork formalities; sometimes they are case dispositive.
 

Back to Trade Secrets & Employee Mobility Blog

Search This Blog

Blog Editors

Related Services

Topics

Archives

Jump to Page

Subscribe

Sign up to receive an email notification when new Trade Secrets & Employee Mobility posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.