Case Law Summaries

Silvestri v. Optus Software, Inc.

• Opinion Date: December 18, 2001
• Business Law
• E-Mail

CONTRACTS; PERSONAL SATISFACTION—With respect to personal satisfaction contracts relating to such matters as operative fitness, utility or marketability and susceptible to objective standards, the New Jersey rule is that the promisor must have a reasonable basis for its dissatisfaction with the promisee’s performance.

An employee had a three-year written contract which provided that the employer could terminate the employment upon: “[e]mployee’s failure or refusal to faithfully, diligently, or completely perform his duties hereunder to satisfaction of the Company or to carry out any lawful instruction of the Company.” The employer fired its employee for alleged poor job performance. The employee sought relief before the courts. The lower court was confronted with conflicting certifications, but ruled that it was “not willing to substitute the subjective opinion [of the court] of what is ‘satisfactory’ for that of the Company’s President ... .” The Appellate Division said “that is not a correct expression of the governing principle of law ... .” An earlier New Jersey Supreme Court case informed the Court that, “[w]ith respect to personal satisfaction contracts relating to matters such as operative fitness, utility or marketability and susceptible to objective standards, the New Jersey rule is that the promisor must have a reasonable basis for his dissatisfaction with the promisee’s performance. This view comports with the majority rule prevailing in other jurisdictions.” Consequently, given the conflicting certifications, the Court remanded the matter for a plenary trial. At that trial, the lower court was instructed to resolve the issue as to the party on whom the burden of persuasion would be placed because, according to the Appellate Division, that question had not been previously answered in New Jersey.

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