Implied and expressed terms Flashcards
Module 3
What is the goal of contract interpretation?
To determine the intention of the parties at the time the contract was concluded, using clear and unambiguous language.
What is the parole evidence rule in contract interpretation?
It prevents evidence that contradicts clear written terms in a contract unless the language is ambiguous.
What is the contra proferentem doctrine?
Ambiguous clauses are interpreted in favor of the party who did not draft the contract, often benefiting the employee.
What are restrictive covenants in employment contracts?
Clauses that limit the actions of former employees, such as non-compete, non-solicitation, and non-disclosure agreements.
Why are restrictive covenants controversial?
They restrict trade, may hinder an employee’s ability to earn a wage, and encroach on personal freedom.
What are key takeaways for drafting non-compete clauses?
Use only when less restrictive options (e.g., non-solicitation) are insufficient. Define reasonable time and geographic limits. Ensure the clause is specific and avoids ambiguity.
What is a fixed-term contract?
A contract for a specified period that ends by lapse of time but may include termination clauses for early exit.
What are potential abuses of fixed-term contracts?
Using consecutive fixed-term contracts to avoid employment standards or reduce employee rights.
What is the purpose of termination clauses in contracts?
To limit notice periods or payments in lieu of notice, reducing separation costs for employers.
When are termination clauses unenforceable?
When they violate minimum employment standards. When they are unconscionable or include a mandatory retirement age. When there is a significant change in job duties (‘changed substratum’).
What is the doctrine of changed substratum?
When significant changes to an employee’s role over time render the original termination clause invalid, requiring common law notice.
How are terms incorporated into employment contracts?
Must be expressly agreed upon and understood by the employee. Secondary documents must be provided at the time of contract formation or with mutual agreement later. New consideration may be required for incorporation.
Why do courts scrutinize restrictive covenants closely?
Because they are considered prima facie unenforceable as restraints on trade, and courts ensure they are reasonable and necessary to protect legitimate employer interests.
What must a termination clause include to avoid ambiguity?
Clear, specific language that complies with minimum employment standards and avoids being grossly unfair or ‘unconscionable.’
What issues arise with incorporating secondary policies into employment contracts?
Issues include employees’ lack of awareness of changes, complexity of policies, and the need for mutual consent and consideration for enforceability.
