Contracts

Fact pattern

CEO runs a small company providing specialized tutoring services to students. CEO employs a few full-time administrative support employees, but otherwise independently contracts with tutors in her community. This structure provides CEO the greatest amount of flexibility in scheduling tutoring sessions for her clients. CEO maintains a database of tutors she has previously worked with, and draws from this database to find tutors for new clients.

Six months ago, CEO’s company was hired by a local wealthy family to tutor their oldest child for the SAT exam. CEO immediately thought of Instructor, a current graduate student who had previously coached several of CEO’s clients to excellent SAT scores. CEO had an administrative assistant draw up her company’s standard contract with tutors. The contract specified an hourly rate of $50, outlined basic parameters of Instructor’s time commitment, and so on. This family requested four hours of weekly tutoring for the next three months, leading up to the next administration of the SAT exam. 

CEO also included language in her contract with Instructor stating, “Tutor shall be paid the total of his or her invoice provided that client’s SAT score is recorded in company files.” This was standard language that CEO used in all agreements with SAT tutors. The contract was sent to Instructor through certified mail. Although tutors typically signed the contract and returned it to CEO, Instructor rarely handled paperwork promptly. CEO was aware of this due to her previous interactions with Instructor. For the last five contracts CEO had sent to Instructor, CEO waited until Instructor would have received the contract in the mail and texted Instructor “K sent–look good?”

As usual, CEO sent Instructor the text. Instructor sent back his customary reply, “Yup I’m in.” CEO then instructed an administrative assistant to record Instructor as having agreed to the contract.

Instructor subsequently scheduled tutoring sessions with the client. After two weeks of weekly sessions, however, Instructor called CEO and left a voicemail about the client. Instructor reported that the client was incredibly unpleasant and hard to work with, and was apparently being forced into the lessons by his parents. Instructor said, “I know this client is promising for you, but I cannot deal with this little brat! I’m not willing to teach this kid for my usual $50 hourly rate. If you want me to keep teaching him, you need to pay me double that.” CEO looked into other available tutors and realized that there were no substitutes who would be able take over coaching the student in question. CEO thus called Instructor and agreed to pay Instructor the $100 per hour he demanded.

Instructor subsequently finished coaching the client, who did well on the next administration of the SAT exam. Although the client’s family sent a copy of the student’s score to CEO, CEO and her assistant did not record the score in the company’s files. Two weeks later, when Instructor submitted his final invoice to CEO, CEO responded “No way! I bet you thought you had me over a barrel with that demand, but I think you’ll find that without the score in my files, I don’t owe you anything.” Instructor then sued CEO for breach of contract. 

CEO now points to two absences in the files. Not only is there no record of the client’s SAT score, but there is also no record of a signed copy of the original contract she sent to Instructor. CEO argues that she and Instructor had no enforceable agreement, and even if they did, she doesn’t owe Instructor any money.

Questions

1. Is CEO correct that she and Instructor had no enforceable agreement? Explain.
2. Is CEO correct that because the client’s SAT score has not been placed in the client’s file, CEO does not owe Instructor any payment? Explain.
3. Assuming the court found an enforceable agreement, would CEO owe Instructor payment at a rate of $50 per hour or $100 per hour? Explain.