The Illinois Supreme Court ruled recently that a contract for lifetime employment is not enforceable if it is not in writing. The decision sets Illinois apart from many other states on this issue. McInerney v. Charter Golf, Inc.
McInerney alleged the following facts. He had worked for Charter Golf as a sales representative for a little over a year when he received an offer of employment with a competitor. When he informed Charter Golf's president of his intention to leave, the president urged him to stay. The company promised to beat the commission offered by the competitor, and promised that McInerney would be the company's sales representative in Illinois and Wisconsin for the remainder of his life, subject to discharge only for dishonesty or disability. In exchange for this promise of lifetime employment, McInerney rejected the competitor's offer and continued to work for Charter Golf A few years later, the relationship deteriorated and Charter Golf fired McInerney.
McInerney brought suit in Cook County, alleging that he had a contract for lifetime employment, which Charter Golf had breached by firing him. The trial court granted summary judgment for the company, on the grounds that such a contract must be in writing to be enforceable. The appellate court affirmed the summary judgment, but on different grounds. Specifically, that court stated that a promise to forego another employment offer was insufficient consideration to convert an at-will employment relationship to one of lifetime employment. The Illinois Supreme Court, in a 4-to-3 decision, rejected the appellate court's reasoning, but affirmed the summary judgment on the grounds originally asserted by the trial court.
The Supreme Court ruled that passing up another job opportunity in exchange for a guarantee of lifetime employment is sufficient consideration to form a binding contract. However, such a contract for lifetime employment falls within the Statute of Frauds ' which requires that certain contracts be in writing in order to be enforceable. Among the types of agreements that the statute provides are unenforceable, unless in writing, is "any agreement that is not to be performed within the space of one year from the making thereof." In its decision, the high court examined the meaning of the phrase "not to be performed within the space of one year" The court noted that many courts have read this phrase to mean contracts that are not capable of being performed within a year. In other words, if a contract is at all possible to perform within one year, it is not covered by the Statute of Frauds and thus does not require a written contract. In the lifetime employment context, according to this analysis, because the employee could have died within a year of making the agreement, the contract should have fallen within the requirements of the Statute.
The Supreme Court, however, stated that this interpretation of the statutory language was "hollow and unpersuasive." The court found that contracts for lifetime employment inherently anticipate a duration longer than one year. Accordingly, such contracts fall squarely within the requirements of the Statute of Frauds. Because McInerney's contract was not in writing, McInerney could not seek to enforce it in court.
Three justices disagreed, pointing out that most courts subscribe to the view that the Statute applies to contracts of indefinite duration only if they are incapable of being performed within a year.