The Importance Of A Written Contract

“So let it be written.  So let it be done.”  This memorable quote is perhaps best known from Yul Brenner’s decrees as Pharaoh of Egypt in the classic film “The Ten Commandments.”  However, its simple principle is applicable to everyday agreements between people doing business together.  Write it down.

While an oral contract is enforceable, the problem with oral contracts is proving them.  Let me give you two recent examples.  A client hired a contractor to renovate rented commercial space prior to opening a new business.  The client understood the contractor to quote one price, and even made installment payments during the work, but he had nothing in writing.  When the work was finished, the contractor presented a bill almost $20,000.00 more than what the client had agreed to orally.  The contractor claims some of the work went beyond what they originally discussed, but no change orders were executed.

In another situation, a wedding planner hired a photographer to assist part time.  Again, the parties did not put their agreement in writing, nor did they consider who owned the rights to the finished photography proofs when the relationship ended.  When the photographer left, he wanted the wedding planner to pay him more money for the rights to continue to use the photographs he had taken during their arrangement.  Had the wedding planner simply inserted a sentence or two in a written agreement identifying the photographs as “works for hire” in which he had exclusive ownership, he could have avoided this predicament.

A written contract does not have to be complex.  And every contract should have three basic components:  (1) a brief DESCRIPTION of the goods being sold or the services performed; (2) the PRICE for the goods or services and how and when it will be paid; and the TERM of the contract or the length of time the parties intend to do business together in accordance with their agreement if it is not a single transaction.

Just as some attorneys may be handy with home repairs (I am not one of them), some contractors and business owners may be able to prepare simple contracts that meet their needs.  Anything in writing is an improvement upon an oral contract.  However, the more complex the contemplated transaction, the more professional draftsmanship can spare the parties to the agreement future conflict and legal expense.  Another well-known quote (at least for anyone over forty) comes from an old Fram Oil Filter commercial:  “Pay me now, or pay me later.”

Non-Compete Clauses: Can They Really Stop Me From Working?

Employees and independent contractors who sign contracts without fully understanding the content may jeopardize their livelihood.  Non-competition clauses in contracts are generally enforceable.  Accordingly, you should read and understand the non-competition clause’s provisions in order to make an intelligent decision about whether the benefit of the contract is worth the risk.  If you’re not confident you understand what the contract says, then a consultation in our Yardley, PA or our New Jersey office will be well worth avoiding an unpleasant surprise later on.

Non-compete clauses in employment agreements must be reasonable in scope and duration to be enforceable.  Generally, courts have held a period of up to two years to be a reasonable duration.  Courts will closely scrutinize any contract seeking to prevent competition in excess of two years.  Nevertheless, for the employee, being unable to work for two years can be punitive enough.

The more difficult analysis is the reasonableness of the scope of a non-compete clause.  When conducting such an analysis, the courts will consider geography as well as the specific duties of the job itself.  For example, a company whose clients are located only in Pennsylvania, New Jersey and Delaware cannot prohibit a former employee from working for another company anywhere on the East Coast.  And a  boutique women’s fashion shop who hired an employee to sell women’s clothing may not be able to prevent the employee from working for a company that sells men’s clothing.  Typically, the conflict arises when the employee attempts to work for someone else.  The courts will look at the old job and the new to determine whether the employee is “in competition” as defined by the language of the non-competition clause.

Like any contract, the language of a non-competition clause can be negotiable.  If you have concerns about whether the  language of a clause in a contract you are asked to sign may impair your  marketability to a  future employer, the time to address that concern is before  you sign the contract!   If you have any questions regarding your employment, contact The  Fegley Law Firm at (215)493-8287 or email Scott Fegley at  scott@fegleylaw.com.   We give you peace of mind!

Allstate awards $22 million to accident victim

Chalk this up as a win for David versus an insurance company Goliath.  Insurance giant Allstate recently was socked with a $22 million verdict for bad faith in a case that was one for the record books in the state of Pennsylvania.  A jury awarded $19.1 million to Patrick Hennessy of Feasterville, PA.  Another S2.9 million was added for delay damages and interest.  Hennessy was the victim of an accident that ultimately resulted in the amputation of his right leg.  Allstate refused to pay its $250,000.00 policy limits to Hennessey because he was outside the insured vehicle when the accident happened.

Jim Boyle of The Pennsylvania Record has more on the accident:

At about 2 a.m. on July 26, 2009, Hennessy was a passenger in a vehicle driven by a friend, Ryan Caruso, when Caruso rear-ended another vehicle. Hennessy and Caruso got out of their vehicle to push their car to the side of the road.  Hennessey was then struck by a vehicle driven by Shawn Robertson, Jr., crushing his limb.

When Allstate refused to pay its policy limits, Caruso assigned his rights against Allstate to Hennessy, allowing the plaintiff to sue the insurer.  The $22 million judgment encompasses the $19.1 million verdict and subsequent delay damages plus interest.

A young man’s life was changed forever and Allstate refused to compensate him $250,000 because of a legalistic reading of its policy language.  Allstate was wrong and now deservedly should pay.

Casey, Hennessy’s attorney, summed it up to the Intelligencer this way:

It was a protracted but ultimately successful battle between a young man with a catastrophic injury and the largest insurance company in America.  It is a testament to what one individual can accomplish through our civil laws when an injustice occurs.

If you have a legal matter related to an injury or your employment, please call our Yardley office at 215-493-8287 or send us an email HERE. We will be glad to help.

GM Scandal Update: Number of Death Claims Rise

In a previous post on this blog, I discussed the growing ignition switch scandal and recall at General Motors.  The whole situation brought to light grave issues surrounding employee training and widespread panic within the automotive industry.  Now, since we’ve had some time to digest the information that has surfaced since the scandal broke, I would like to provide you with an overview to date and an update.

Scandal in Review

In an August 21, 2014 article for Fortune, Ben Geier, gives us a recap of the scandal that has surrounded GM since the beginning of 2014.  Geier writes:

For the better part of this year, General Motors has been embroiled in scandal. It began in February, when the automaker recalled thousands of small cars for faulty ignition switches. Those defective switches, it turns out, had been in cars for more than a decade, and they have been linked to numerous road accidents and 13 deaths.

Earlier this summer, as part of its effort to manage the crisis, GM launched a compensation protocol to pay back people who were seriously injured, or had lost loved ones, in crashes involving the ignition switch problem. GM tapped lawyer and compensation guru Kenneth Feinberg to manage the General Motors Compensation Protocol.

The list of eligible vehicles, though, is shorter than you might expect. Not all cars with faulty ignition switches, or key rotation problems, qualify for the Feinberg protocol.

Among the vehicles recalled since March, there have been three fatalities in two crashes involving Chevrolet Impalas, [Spokesperson Alan] Adler said.

A major sticking point for people is the fact that GM knew of the issue, yet still sold the faulty vehicles to unsuspecting customers.  Writing for Ring of Fire Radio, Joshua Schwitzerlett says this in an August 20th article (emphasis added):

At issue for many people are the faulty vehicle ignition switches that GM was aware of when it continued to sell them to people. The switches would allow the vehicle to randomly shut off at the slightest disturbance. The effect was potentially lethal. If an accident occurred during one of the incidents when the vehicle had randomly shut off, the airbags would not deploy.

Even after the threat was known and the danger was reported within GM, the company didn’t immediately recall the potentially deadly vehicles. Instead, GM engaged in a series of cover ups and minimizations to try and limit letting the public know how much damage had been done.

Update: More Death Claims

107.  That’s the number of death claims the GM Compensation Fund has received – not 13 as we originally thought.  Fortune’s Ben Geier has more in this August 27th article (emphasis added):

The GM Ignition Compensation protocol has received 107 death claims since it started accepting claims on Aug. 1, a spokesperson for the protocol said Wednesday. Some of those are claims for multi-fatality accidents. The spokesperson did not release how many fatal accident claims were multi-fatality versus a single fatality.

The number of death claims is higher than the 13 deaths that GM has officially attributed to the faulty switch.

The fund started accepting claims on Aug. 1 and will remain open until Dec. 31.

Claims for compensation will be evaluated by the fund’s administrators. They will look at whether the ignition switch was responsible for a severe physical injury, or a death, and Feinberg and his team will decide how much money to award.

GM has estimated the protocol will pay out between $400 and $600 million.

Worse than the lack of employee training we previously reported is the fact that the company withheld this information from the public.  I understand that companies need to make money, but doing so at the risk of harm (or even death in this case) to your customers is unconscionable.  One can only hope that this is a lesson to other companies and that GM satisfies every legitimate claim so the victims’ families receive some semblance of justice.

If you have a legal matter related to an injury or your employment, please call our Yardley office at 215-493-8287 or send us an email HERE. We will be glad to help.

In Light of GM Recall Scandal, ‘Fear of Liability’ Grows for Automakers & Suppliers

The fear of liability is growing … A lot of suppliers think they are covered if they notify the [manufacturer], but [the National Highway Traffic Safety Administration] may be taking a closer look at the participants in the reporting system.

– Tom Manganello, partner and co-leader of the automotive industry group at Warner Norcross and Judd LLP in suburban Detroit.

As the deadly General Motors (GM) ignition-switch scandal and recall grows, automakers and suppliers are worried about greater regulation.  Further, earlier this month, GM fired 15 employees associated with the scandal and the National Highway Traffic Safety Administration (NHTSA) is focused on getting to the bottom of the situation as it pertains to every company involved in the process.

In a June 23, 2014 article on the Automotive News website, Dustin Walsh gives us the latest:

Automotive manufacturers must — because they can’t afford not to — protect themselves from liability in every aspect of production. Attorneys have been in overdrive since the GM recall scandal broke in February, either assisting the automaker or working with suppliers as recalls spike across the industry. Companies are feverishly working to correct potentially harmful language in documents, identify legal liabilities and prepare for the possibility of increased regulation.

On top of that, many are in a state of fear or panic.  One lawyer by the name of Dan Sharkey, who is a partner at Brooks Wilkins Sharkey and Turco PLLC of suburban Detroit, explained how he received more client calls regarding recalls in 2014 than in the previous 10 years combined.  The cause of this fear centers on the legal ramifications.  Walsh continues:

It’s the legal ramifications for GM that has the industry scrambling. The automaker has already been slapped with a $35 million fine by the U.S. Department of Transportation, is under a criminal investigation that could lead to fines and several civil lawsuits related to the faulty ignition switches linked to at least 13 deaths.

The civil suits have already dragged in suppliers Delphi Automotive, maker of the ignition switch, and Continental AG, which supplied airbags to the defective cars. The lawsuits allege Continental and Delphi knew of the issue and didn’t fulfill a duty of reporting them to the National Highway Traffic Safety Administration.

In the short term, all of this is leading to many companies being proactive in terms of employee training.  Walsh explains:

Daniel Rustmann, partner and co-chair of the global automotive practice at Detroit-based Butzel Long PC, said the “era of recalls” is causing an increase in training on liability, from top to bottom in organizations.

“The best advice I give to clients is to get their people well-educated about the laws, how to handle reporting and requests from outside the company,” he said. “This is a communication issue at its root and needs to be handled effectively.”

So, while this has been a tragedy and complete disaster on many levels, we can take solace in the fact that something is being done.  At the very least, if employees are more educated, we hope these types of issues never happen again.

If you have a legal matter related to an injury or your employment, please call our Yardley office at 215-493-8287 or send us an email HERE. We will be glad to help.