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American Software, Inc. v. Ali

California Court of Appeal
54 Cal. Rptr. 2d 477 (Cal. Ct. App. 1996)


Melane Ali (plaintiff) was a saleswoman for American Software, Inc. (defendant). Ali was paid a base salary along with a guaranteed monthly “draw,” from which any sales commissions Ali earned were taken. Ali reviewed and signed an employment contract upon beginning work with American Software in 1991. She also had a lawyer review the contract and negotiated with American Software to change a few of the contract terms. The executed employment contract stated that “[c]ommissions are considered earned when the payment is received by the Company,” and that upon an employee’s voluntary termination of employment, “the right of all commissions which would normally be due and payable are forfeited 30 days following the date of termination.” In 1994, Ali quit voluntarily and American Software received payment on two of her transactions more than 30 days after she quit. Based on the terms of the employment contract, American Software declined to pay Ali commissions for those two transactions. Ali submitted a claim with the Labor Commissioner and appealed his denial of her claim to the trial court. The trial court found that the contract term was unconscionable and found in favor of Ali. American Software appealed.

Rule of Law


Holding and Reasoning (King, J.)

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