Think that a promise must be in writing in order for it to be an enforceable obligation? No, it does not, according to a 2021 state supreme court decision.
Jed Goldfarb was an investment advisor and research analyst, earning on average more than $400,000 a year, exclusively from commissions. One day in March, he met David Solimine, scion of a wealthy family, and they began to talk about the stock market, about Jed being interested in a new job, and about how Jed might be able to manage the Solimine family’s sizeable investment portfolio. In June, after more conversations, some phone calls, and a meeting with David’s father, David offered Jed the job of managing the family portfolio. Jed and David agreed that Jed would receive a $250,000 salary plus a percentage of investment gains. Jed asked for a term sheet, but before he received anything in writing, he quit his job and began providing the family with profitable stock tips and investment advice.
In August, David reneged, and said that he would not employ Jed, after all. After several months, Jed found new employment, but he never was able to earn what he made at his original job. Jed sued, and a jury found in his favor, awarding him $237,000 in damages, based on what he would have earned in salary from the Solimines.
The New Jersey Supreme Court found that the proper measure of Jed’s damages was not what he would have earned by working for the Solimine family, but, rather, the losses he suffered by relying on David’s oral promises of a job. The court based its decision on a branch of contract law known as promissory estoppel, which has four elements:
- a clear and definite promise;
- made with the expectation that the other person will rely on it;
- the other person does reasonably rely on the promise; and
- suffers damage as a result.
The court sent the case back to the trial court for a new trial on the amount of Jed’s damages, stressing the important public policy of deterring “individuals who make promises with the intent that others rely on them and thereafter seek to avoid the consequences of that reliance when the promise is broken.”
– Goldfarb v. Solimine, 245 N.J. 326 (2021)
What this means to you:
Managers and supervisors are often unaware that, legally, they are agents of the employer, and that what they say can create binding corporate obligations. We give your leaders the tools and training they need to avoid making promises that can lead to liability in our Managing Within the Law workshops. Available in full-day and half-day formats, in person or by webinar, Managing Within the Law is an essential skills program that is a key component of every people manager’s training curriculum.
To find out more about our national HR training programs or to book a workshop, please call 800-458-2778 or email us.
Updated 06-08-2021
Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.
