Complicated Employment Agreement – part II

Based on ruling 77021 of the Eretz Hemdah-Gazit Rabbinical Courts

Case: The plaintiff (=pl), an acquaintance of the defendant (=def1), the manager and owner of a business (=def2), told her that he could improve her revenue collection. Pl sent def1 an email stating what he would charge her: 1000 GBP (British pounds) per month – 500 to be paid immediately and 500 when the business could "afford it." Also, he would obtain a 15% share of def2, which she could buy back whenever she wanted for 10,000 GBP. Def1 did not respond to the email, and no contract was signed, but pl started working in Nov. 2014 and started receiving 500 GBP a month. In March 2015, def1 informed pl that she was discontinuing his work. Pl asked for the 10,000 GBP buyout, agreeing to payment in twelve 750 GBP installments (i.e., he forgave 1,000 GBP). After receiving one such payment, pl agreed to delay other payments due to def2’s cash flow problems, but as of January 2016, he is demanding the various back payments. Def1 raised a procedural issue about who the defendant is: she never intended to pay from her pocket, def2 never signed a document, and the payments were made by a front company created by def1’s husband. Def1 claims that she did not see pl as an employee to whom she owed money, and she began paying him only to avoid acrimony. She did not respond to the pay scale email because she did not understand it, and thus she did not accept its provisions. In any case, payment should be linked to benefit from pl’s services, which were never achieved; that which she already paid was more than enough for his efforts. The extra 500 GBP a month were anyway to be paid only when def2 was profitable, which it never became. Pl points out that in the meantime hundreds of thousands of GBP were paid to other workers.

P'ninat Mishpat (704)

Various Rabbis

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517 - Complicated Employment Agreement – part I

518 - Complicated Employment Agreement – part II

519 - Sharing the Expansion Area

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Ruling: Last time, we determined who is responsible for each claim and dismissed the claim that pl was not def2’s worker. We now deal with further claims.

Deciding on compensation package when there was no agreement – A tosefta (Kiddushin ch. 2) rules that if there was a stalemate in negotiations on a deal and the matter later went through without further discussion, the demand of the one who did not reinitiate going through with the matter anyway is accepted. While that source is about a sale, the Ramban (Bava Metzia 77a) posits that the same is true of employment. We see then that a proposal that was never explicitly accepted can still implicitly become the working agreement. The matter is all the more clear in our case where pl’s was the only proposal raised and it was never rejected.

One of the broadest rules in agreements is that one is not able to claim that his apparent agreement is invalid because he did not understand it (see Shulchan Aruch, Choshen Mishpat 61:13). This is true in this case, and even more so because def1 mentioned her being a seasoned businesswoman and because she made payments that showed that she did understand at least most of the proposal.

Pl’s help is a condition for payment – Conditions that go unspoken are rarely presumed to be operative. It is not illogical that someone is paid for assistance that has the potential to be helpful even if results were not as envisioned. In this case, it is also difficult to ever know definitively whether the advice brought results. The fact that 500 GBP were withheld because of lack of sufficient profits is just a delay in payment, and does not indicate that the money will never become due at all.