Suppose you’ve drafted a fairly lengthy agreement entitled "Employment, Non-Solicitation, and Confidentiality Agreement" for an employee to sign. And suppose that among the provisions is a paragraph entitled "Agreement Not to Solicit". And now suppose that the language details various items that the employee is prohibited from doing.
What’s the issue, you may ask? Well, suppose as well that the paragraph is missing "operative language". In other words, it’s missing a few key words about the employee’s responsibility under the agreement such as "I shall not" or "I will not" do those prohibited tasks.
Is the agreement (and the specific paragraph prohibiting solicitation) still enforceable?
According to an Appellate Court decision released this morning (and officially released June 16, 2009), the answer is a most definite "yes".
In Hilb Rogal & Hobbs Co. v. Randall (download here), the court held that
despite the missing language, it is clear from the title of the employment agreement, the title of paragraph six and the language found under paragraph six that the parties intended that the defendant would be prohibited from engaging in solicitation for two years. … The fact that the employment agreement imposes remedies for violations of paragraph six further evidences that paragraph six was intended to prohibit certain conduct.
From a legal perspective, the case is important because the Appellate Court reached this conclusion without having the "reform" (or rewrite) the contract:
Contrary to the trial court, we do not believe that the contract at hand needed to be reformed for the court to be empowered to supply an obvious missing term consistent with the clear intent expressed in the balance of the contract language. … Because the intent of the nonsolicitation agreement is plain from an objective reading of the contract, a request for reformation is not necessary to enforce the provision.
Why is this case important for employers?
There are several takeaways from this decision. First, employers should never overlook the importance of proper drafting. Just a few missing words here has caused lots of grief for this employer. Even agreements that seem perfunctory (and perhaps borrowed from other agreements) should be scrutinized to ensure that no language has been lost in the drafting and revisions.
Second, the Court seems to approve of the contract even though the only consideration for the agreement was a promise of continued employment by the employer. In addition, the Court tacitly approves of the non-solicitation clause’s two-year prohibition without any consideration of whether the scope of that provision is overly broad. Employers should keep this in mind as they draft future agreements.
Overall, the decision is a sensible one and elevates substance over form. That doesn’t mean that employers should draft their agreements in haste; but it does mean that if there is a clerical errors or inadvertant omissions, employers can still try to enforce that agreement.