The drafting of an employment contract is an incredibly important part of protecting the rights of your business and your employees. When negotiating the terms of a person's employment, there are often many different parts of the agreement, like non-compete agreements, indemnity agreements, and severance and separation clauses. At times, those provisions may run contrary to Massachusetts law; and when they do, that provision or the entire contract could be void.
The contract and business litigation lawyers at the Katz Law Group has the years of experience needed to legally and effectively draft employment contracts on your behalf or to represent your business when employment contract disputes arise.
Effect of a "Void" Contract or Contract Provision
Certain types of contracts or their provisions are "void," meaning they are of no effect and cannot be enforced. Typically, what makes a contract provision void is because it violates Massachusetts or federal law (or laws of other states if the contract incorporates other state law).
When a contract provision is void, it will not be enforced by a Massachusetts court. In a lawsuit that seeks to enforce the specific void provision, the lawsuit may be dismissed. If instead, the lawsuit seeks the enforcement of the contract as a whole, but the contract contains certain void provisions, the court can enforce the contract minus those void provisions, if possible.
At times, the void provision is so essential to the underlying contractual agreement, that the entire contract becomes unenforceable.
Reasons a Contract May Be Void
The reasons a contract, or one of its provisions, could be void are numerous. Some of the more common are described here.
Contracts which discriminate based on federally or state-protected classifications are void as a matter of law. These protected classes include:
- national origin,
- sex (gender),
- mental or physical disability,
- genetic information,
- sexual orientation,
- gender identity, and
- active military status.
If a provision in some way discriminates against these protected classes, the provision or entire contract could be void.
Example: Bad Business, LLC constructs houses, and regularly hires subcontractors. The contracts with the subcontractors all contain a provision that they will only hire workers who are Caucasian (white) and that hiring workers of any other race will invalidate the contract. Such a provision will never be enforced by a Massachusetts court.
A contract provision which requires a party to commit an illegal act will not be enforced. Any act or omission required by a contract which violates Massachusetts or federal law will be stricken from the contract or may void the entire contract.
Example: Bad Business, LLC hires a new accountant to perform its budget-balancing, financial planning, and taxes. In the employment contract, the accountant is required to under-report the company's assets when they exceed the company's liabilities, in order to save on the company's taxes. This is illegal (and the IRS will certainly have something to say about it). The provision would be void, but the rest of the employment contract could theoretically survive.
Misrepresentation or Fraud
Massachusetts courts will not enforce provisions that are the result of misrepresentation or fraud. A contract can be deemed unenforceable if one party obtains the other party's consent to contract due to misleading or false statements. This could include omitting important information about the nature of the agreement.
Example: Bad Business, LLC hires Anne as a sales consultant. She is told she will receive a commission for every house that is built due to the business she brings in. What she is never told, but is inserted into a contract amendment, is that she will only be compensated for houses for which Bad Business, LLC does all of the construction. The business subcontracts at least parts of houses in over 90% of its projects, which substantially reduces the compensation Anne earns, despite her hard work in bringing in business. The LLC's misrepresentation would likely void the provision, and Anne could be compensated for the work she brought in.
Contracts can often be modified to become enforceable, rather than losing all ability to enforce its provisions. Contract modifications can cure many of the issues associated with otherwise void contracts or contract provisions.
Modifications to a contract are often done by agreement of the parties. Settlement negotiations can end in modifications that serve the best interests of both the employer and the employee. Non-trial options such as arbitration and mediation can be useful in fostering these contract modifications.
Consult a Business Litigation Defense Attorney in Massachusetts
There are ways to prevent void contracts and contract provisions which can save your business a great deal of time and money. If a dispute cannot be avoided, there are strategies that can be employed to protect the financial interests of your business.
At the Katz Law Group, we are here to protect your business's contract rights. Contact us today for a consultation. We represent businesses in employment contract disputes in Marlborough, Worcester, and Framingham, as well as the rest of Massachusetts.