“Can I get out of a signed employment contract?”

Question: Alan, I’m in higher education. I signed a contract for a job at a university in Pennsylvania that begins on  August 1st. But now I have a better offer from a university in Massachusetts. Can I get out of my Pennsylvania contract? Thanks.                                                     

New York, New York

Answer: Dear Eesha, Depending on a few factors, I don’t think it is likely you will have any legal problem getting out of the Pennsylvania contract. This is my analysis:      

1. Without reading each word of your contract for the Pennsylvania position, I can’t give you a definitive analysis of your situation. I’ve been called a lot of things in my life, but “psychic” is not one of them. To understand the rewards – and more importantly for you, the risks – of rejecting a signed employment contract, a person really has to read that contract word for word, and punctuation mark for punctuation mark. While I have 30+ years of experience with employment contracts, and that includes for those like yourself in higher education, your contract could well contain  provisions I have never seen before, or one I would not expect to see in it. 

2. While it is possible that your contract has some penalty clause, or other specific “penalty” associated with your cancelling it, that is not at all common. It is extremely rare for an employment contract to contain a provision that contains some sort of penalty provision for cancelling the contract. It is conceivable that you will find a “repayment” provision regarding any monies already paid to you for (a) signing bonus, (b) interview travel and accommodations, or (c) headhunters’ fees already paid with respect to your hiring, but I don’t expect that. If your contract does contain such a repayment obligation, you would have probably seen it already. If you haven’t looked for penalty clauses, or repayment provisions, read your contract over again with “penalty” and “repayment” in mind, although those specific words may not be used. I don’t think you will find anything like that in your contract.

3. A fundamental concept of contract law is that a contract that is signed by both “sides,” but that neither “side” has begun to “perform,” is not enforceable, and thus voidable by either “side.” Among lawyers and Judges, the phrase used for such a contract is “executory contract,” and as most legal doctrines are, it is derived from common sense. The idea is “No harm, No foul.” If neither “side” has started to fulfill his or her promise to the other, then nothing is lost if the two sides just “walk away” from the intended relation.

Sometimes a problem arises if one of the “sides” has, relying on the signed contract, started to prepare to perform his or her duties under the contract. The most common example is the employee who, after signing an employment contract with a “new” employer, resigns from their “old” employer, and then the “new” employer changes its mind. Ouch!! While it is quite possible that an employee could suffer damages in this way, in light of the shortage of jobs these days, and the abundance of job seekers, it is hard to imagine the university in Pennsylvania suffering any damages for relying on your contract signing due to its scheduling courses and not being able to find a replacement. That said, such “damages” are possible, although quite unlikely.

It is then up to the “relying party” to try to minimize its “damages” by trying to find a replacement employee or replacement job, as the case may be.

4. One thing is for sure: you should not reject the Pennsylvania contract until your Massachusetts contract is fully signed. Just two notes of caution: First, it is not prudent to turn down one secure job if the second job is not yet secured. According to your note to me, you have a new “offer,” and not a new “contract.” Just make sure the Massachusetts job is secure, and you don’t “fall in a hole” of giving up the first job, and losing the second one, don’t reject your Pennsylvania contract before the Massachusetts contract is secure.  

The second precaution is that “it is a small world.” By this I mean that it is possible that your Pennsylvania employers, if they are very unhappy, might just find out about, and try to damage, your new, Massachusetts job. This is a consideration you will need to bear in mind. It rarely happens, but it has happened to clients of mine.

5. No matter what you do, and in all you do, show grace, good judgment and gratitude. My sense is that you should first make sure the Massachusetts job is secure, and can not fall through any possible “crack” in the sidewalk. Second, you should gracefully write to your University employer and explain that “due to unexpected circumstances” you need to rescind your acceptance of their job offer. Show concern, show compassion, and show gratitude for the opportunity. Give them as much notice as possible, and recognize the disappointment and the disruption this may cause. Nonetheless, be clear and resolute. Bear in mind that one day, you may want to apply there again, or you may otherwise need something from the very  person you are now disappointing.

Imagine you were in their “shoes,” and do your best to act in a way you would want someone to act if they were in your “shoes.” That is a rule that you can follow faithfully, no matter what you do in life. It always works best. Very, very few exceptions.

Eesha, employment transitions involving employment contracts can be tricky. You are wise to consider the implications before you take action. In this, I hope I have been helpful to you. Good luck on your new job, and in your new location. Thanks for writing in.

My Best to You,
Al Sklover

P.S.: You might be interested in our New Employment Negotiation Checklist for potential “rewards, risk-limiters, and role-enhancers” to consider requesting from your new employer. To obtain copy, just [click here]. Delivered by Email – Instantly! 

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© 2013 Alan L. Sklover, All Rights Reserved.

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