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Laks v. LCI Lay-Cee, Inc.

A-7139-97T5 (N.J. Super. App. Div. 2000) (Unpublished)

CONTRACTS; ENTIRE AGREEMENT; EMPLOYER-EMPLOYEE—It is not sufficient to focus on an “entire agreement” provision of a contract where the documents and surrounding circumstances might show that such was not the parties’ understanding.

An employee began work for a company’s Mexican facility after several job interviews. At that point, there was no formal signed document respecting the employment. There were, however, handwritten documents, purportedly bearing the initials of the company official that interviewed the employee and purportedly prepared during the interviews. They set forth, in some detail, the terms of what the employee contended to be a three-year employment agreement. According to the employee, on the strength of the understandings contained within those documents, he discontinued his search for employment with other companies, relocated to Mexico without his wife and children, and began to work in the day-to-day management of his employer’s Mexican facility. About a month later, on a trip to New Jersey, the employee was presented with a typewritten document which was portrayed to him as a covenant not to compete. He signed it without reading it, as a “test of trust.” The document contained not only non-competition provisions, but also a provision giving the employer the right to terminate the employee’s employment on four weeks’ written notice. It also included an “entire agreement” provision intending to make it into the integrated, complete and exclusive statement of the agreement between the parties and also stating that the agreement could not be changed or terminated orally. Another handwritten document, purportedly prepared a month later, referred to a “3 yr program,” and had slightly different compensation figures, though considerably less detailed than the monetary arrangements noted in each of the handwritten memoranda. About a year after the employee began working in Mexico, his employment was terminated. He then claimed that the he should have enjoyed the benefit of a three year employment agreement. The lower court, primarily based upon the “entire agreement” provision in the typewritten document, dismissed the claim on summary judgment. The Appellate Division reversed because it concluded that the lower court had “undervalued the significance of the terms of all of the documents read together, timing and performance issues, and other questions of relationship.” According to the Court, “[i]t is not adequate in the circumstances depicted simply to focus on the ‘entire agreement’ clause of the September 15 document or any other provision thereof as nominally superseding any understandings the parties may have had previously. The impact of the parties’ conduct and the October memorandum must be considered as well.” Further, because the earlier handwritten memorandum contained considerably more detail on matters of compensation than the typewritten agreement did, the Court thought that the employee should have the right to prove that, despite its “entire agreement” cause, the typewritten agreement could not have been intended by the parties as a substitute for the unaddressed details previously negotiated and memorialized in the handwritten documents.

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