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Shore Career Consulting, Inc. v. Hobart West Group

A-1848-01T3 (N.J. Super. App. Div. 2003) (Unpublished)

CONTRACTS; INTERPRETATION—Where a contract is ambiguous about whether a party can act unilaterally in a way that would deprive the other party of compensation, a court will interpret the contract consistent with an understanding that payment was intended.

A company entered into an agreement with an executive placement firm. The agreement contained the following guarantee: “All candidates are guaranteed for 90 calendar days from the date of employment if the candidate is terminated for cause. The guarantee does not apply if the candidate is the subject of a layoff due to staff reduction, economic circumstances, merger or acquisition.” The hiring company struck out all of the words after “date of employment.” It then hired a candidate and terminated that candidate’s employment 86 or 87 days later. The placement company sought a commission and the lower court awarded that commission. The Appellate Division found “no question that [the executive placement company] complied with its obligations with respect to the agreement. Obviously, it could not control whether [the hiring company] wanted to terminate [the employee] just before the ninety-days expired for any reason, including avoiding responsibility for the commission.” It also found that the language of the guarantee was neither clear nor unambiguous, either before or after the amendment. Accordingly, it held that “the ambiguous language that purports to guarantee the candidate for ninety days from the date of the employment [did] not mean that regardless of the reason, if the individual is terminated before ninety days expires, [the placement company could not] earn its fee,” and, therefore, that allowing the hiring company to arbitrarily terminate the employee and avoid the commission “would hardly be within the ambit of what was contemplated by the terms of the guarantee.”

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