McInerney v. Charter Golf, Inc.

Supreme Court of Illinois · 1997 · Contracts

ContractsEmployment contractsConsiderationStatute of fraudsemployment at willlifetime employmentpermanent employmentconsideration

Facts

Dennis McInerney worked as a sales representative for Charter Golf from 1988 to 1992. He alleged that after receiving an offer from Hickey-Freeman, Charter Golf's president urged him to stay and promised him a 10% commission in Illinois and Wisconsin for the rest of his life, subject to discharge only for dishonesty or disability. McInerney allegedly accepted that offer and gave up the Hickey-Freeman opportunity in exchange for the lifetime employment guarantee. Charter Golf later fired him, and McInerney sued for breach of contract.

Issue

Is an employee's promise to forgo another employment opportunity sufficient consideration to alter an existing at-will employment relationship into one for lifetime employment? If so, is such a lifetime employment agreement unenforceable unless it is in writing under the statute of frauds?

Rule

Traditional contract principles govern employment contracts. A bargained-for exchange of promises or performances, including a promise or forbearance such as giving up another job opportunity, is sufficient consideration to support a lifetime employment agreement; however, a contract for lifetime employment is treated as one not to be performed within one year and therefore must be in writing to satisfy the Illinois statute of frauds. Partial performance does not remove such a contract from the statute where the employee has been compensated for services performed, and reliance alone does not bar the statute absent misrepresentation or concealment supporting equitable estoppel.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Chicago, Lena Ortiz worked at Prairie Summit Textiles, a fictional apparel distributor, as an at-will regional sales manager. After she told the company president she intended to accept a lucrative offer from Lakefront Tailored Goods, the president orally promised she could keep her territory and commissions for the rest of her life, terminable only for theft or permanent incapacity, if she stayed; Lena declined the outside offer and remained.

If Lena later sues for breach after being fired, which statement is most accurate under the governing rule?

Explanation. Traditional contract principles govern. A bargained-for exchange may consist of a promise, act, or forbearance. An employee's relinquishment of a valuable outside job opportunity in exchange for the employer's promise of lifetime employment is sufficient consideration. But the majority also held that lifetime employment contracts fall within the statute of frauds and must be in writing, so an oral agreement remains unenforceable. (Derived from McInerney v. Charter Golf, Inc. (1997).)