When Can Napkin Notes Become a Binding Contract . . .?

Posted on August 15, 2019 in Business Transactions

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A written contract doesn’t have to be filled with legal mumbo-jumbo in order to bind your business. That was a hard lesson learned by a Missouri company, in the case of Baum v. Helget Gas Products, Inc.

In the Baum case, the prospective employee (Baum) took copious notes during his interview, including descriptions of salary, benefits and the length of his contract. He wrote “Contract With Helget Gas Products St. Louis Mo. Market” across the top and handed it to the Helget manager, who signed it. When Helget fired Baum a year later, Baum sued and won, saying he had a three-year contract. The court agreed.

The moral of the story: Don’t sign anything employee-related without first running it by legal counsel or HR. What the Helget manager could have done is to make a copy of Baum’s notes and tell him that they’d be provided to corporate counsel, who would draw up the appropriate documents in accordance with company policy.

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