One of the most important things to remember when it comes to contract law is that you take on an additional “legal duty” when you are the drafter of the contract to get it right. Take a look at the case below and consider, if the drafter of the contract had not been careful as to the language used, they may have been liable for this breach of contract issue.
[Bodnar v. St. John Providence, Inc.], 327 Mich. App. 203
FACTS: Plaintiffs are certified registered nurse anesthetists (CRNAs) formerly employed by St. John at hospitals located in Michigan. Ascension Hospital is the defendant and parent company of St. John.
Hospital defendant elected to outsource St. John’s anesthesiology services and began to negotiate the formation of PSJ Anesthesia, PC (PSJ), a separate entity that would provide those services.
Hospital defendant contracted with PSJ to transition the employment of St. John’s CRNAs, plaintiffs, direction to PSJ and plaintiffs were notified they would cease being employees of St. John and offered employment per PSJ, with less benefits. The language of the contract called for severance or, transition to a comparable job.
Plaintiffs declined PSJ’s offers of employment on the ground that the offers did not constitute comparable jobs providing commensurate compensation and benefits. The contract defines the term “comparable jobs” as positions that:
paid at least 80% of the employee’s “current pay rate” for which the employee had the ability and qualifications to perform.
Plaintiffs initiated breach of contract.
TRAIL COURT – Granted summary judgement for defendant Hospital. Plaintiffs appealed.
PLAINTIFFS ARGUE: Terms as to pay and comparable job are ambiguous and therefore, the decision should be decided against the drafter of the contract.
APPELLATE COURT: Affirms trial court decision.
Why? Although the phrase “current pay rate” is not defined within either of the policies, the fact that a term is left undefined does not render that term ambiguous. A court’s primary obligation when interpreting a contract is to determine the intent of the parties. Intent is discerned from the contractual language according to its plain and ordinary meaning. A contract is ambiguous only when two provisions irreconcilably conflict with each other or when a term is equally susceptible to more than a single meaning. Whether a contract is ambiguous is a question of law, while determining the meaning of ambiguous contract language becomes a question of fact.
The contract at issue specifically explains what is meant by the pay for new hires by PSJ there was no ambiguity evidenced by the plaintiff’s decision to not accept the job based on the pay.
Bodnar v. St. John Providence, Inc., 327 Mich. App. 203, 933 N.W.2d 363, 2019 Mich. App. LEXIS 351, 2019 WL 1049639 (Court of Appeals of Michigan March 5, 2019, Decided). https://advance-lexis-com.libdatab.strayer.edu/api/document?collection=cases&id=urn:contentItem:5VK5-3S01-JX8W-M2NK-00000-00&context=1516831.
Ben signs an employment contract with Leo’s Lemonade Stand that reads, “You are an employee-at-will.”
At the signing, Leo tells Ben that the company policy, before firing an employee is to give three warnings.
Ben is fired by Leo after six months, without warning, and Ben sues for breach of an oral contract.
Leo denies there is a policy for firing employees and points to the written contract, signed by Ben.