So, here’s the rule, as recently summarized by a New York County trial court:

“The requirements for formation of an enforceable contract are:

(1) at least two parties with legal capacity to contract;

(2) mutual assent to the terms of an agreement with reasonably certain terms; and,

(3) consideration (i.e., payment).

(4 NY Prac., Com. Litig. in New York State Courts § 59:12 [2d ed.], quoting Cobble Hill Nursing Home, Inc. v Henry and Warren Corp., 74 NY2d 475, 482 [1989]).

But what on earth does that mean?

The first prong is relatively straightforward: I can’t sell you a property that I don’t own, nor can I sell you that property if I lack the mental capacity to make the sale (no jokes, please).

The second prong means that both parties reach a “meeting of the minds,” i.e., they both understand what their respective obligations are, and agree to do it. As a practical and legal matter, this is referred to as an “offer and acceptance,” both of which must be clearly made. Importantly, New York’s courts have long held that “assent may be implied when a party has conducted himself in such a manner that his assent may fairly be inferred.”

The  upshot is this: if there is a clear offer by one side, and the other party to the purported agreement starts acting on it in a way that clearly demonstrates their belief that there is an agreement, then guess what?

You’ve got an enforceable contract under New York law.

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On a practical level, that means that there are some important facts that must be in place before a New York court will bar a lawsuit, and compel the parties to pursue arbitration; one such fact is that the party seeking to compel arbitration must actually be a party to the underlying contract – or at the very least,  a tacitly acknowledged third-party beneficiary of the contract (i.e., that the contract was entered into for their benefit).

And, according to a New York Federal judge in a May 20 opinion, that was exactly what was missing in Miness v. Ahuja. In that case, the plaintiff sold to defendants several nursing homes that had been owned by his family. As part of the purchase agreement, the defendants agreed to retain plaintiff as a consultant for a period of two years, providing that the nursing homes met certain performance criteria.

After defendants terminated plaintiff – well before the expiration of the two-year period, plaintiff sued, and defendants predictably sought to dismiss the case on the grounds that it was barred by a mandatory arbitration clause that was in the agreement.

There was one “little” problem with this argument, however; the entities that signed the agreement with the plaintiff were not the same ones that were sued. The defendants’ operating companies – which had signed the employment agreement – were not parties to the lawsuit, and therefore, the Court held, lacked standing to enforce the arbitration provision of the contract, stating:

“[T]he only signatories to the Miness Employment Agreement are Miness and the Operating Companies. The Operating Companies are not parties in this action, and thus cannot invoke its provisions in this case. As for the defendants, none are party to the Miness Employment Agreement, and unless they are explicit third party beneficiaries of the contract, they cannot enforce its terms. See Premium Mortg. Corp. v. Equifax, Inc., 583 F.3d 103, 108 (2d Cir. 2009) (“A non-party to a contract governed by New York law lacks standing to enforce the agreement in the absence of terms that ‘clearly evidence an intent to permit enforcement by the third party’ in question,” quoting Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., 66 N.Y.2d 38, 45, 495 N.Y.S.2d 1, 485 N.E.2d 208 (1985)). Here, there is nothing in the Miness Employment Agreement that suggests that the defendants have a right to enforce the contract as third parties.”

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“Once the commission is earned, it cannot be forfeited (see Davidson v. Regan Fund Mgt. Ltd., 13 AD3d 117 [2004];⁴ Yudell, 248 AD2d 189, supra). There is a long-standing policy against the forfeiture of earned wages, and this applies to earned, uncollected commissions as well (Weiner v. Diebold Group, Inc., 166, 166-167[1991]) …”

On the other hand, “although generally an at-will employee is not entitled to post-termination commissions, the parties are certainly free to provide otherwise in a written agreement.”

There is another important rule to consider, however. And that is the doctrine of contra proferentem, which states that an employment agreement should be construed against the drafter.  In this case, the Court held that had Management “meant to foreclose the possibility that plaintiff might earn a post-termination commission on a placement” arranged by plaintiff, it “could have said so explicitly.” And this they clearly failed to do.

The moral of the story is obvious: be very, very careful in drafting your employment agreements.

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Before we can approach a fiduciary’s obligations, we must define what a fiduciary is – and what it is not. A fiduciary relationship is characterized as one where there is inherently and significantly greater trust and confidence than that which exists between two companies that are dealing at arms’ length. The more common examples of this relationship include the following: employee/employer, agent/principal, partners/co-venturers and officers and directors/corporation. The existence (or lack) of a fiduciary relationship is, generally speaking, a fact-specific inquiry; in other words, there is no bright-line test. However, some relationships have been held too attenuated to be considered “fiduciary,” such as arms’ length transactions between an owner and contractor, or a condominium seller and purchaser.

Since the relationship between fiduciaries is based on heightened trust, there are correspondingly greater responsibilities, namely, to act in the best interests of that fiduciary. These responsibilities are with fairly strict limitations, however.

One important example is that of the employee who seeks to start a competing business. Although the employee may not actively solicit or divert his employer’s clients (or proprietary information) while still employed, he may form  a competing business even before leaving his job so long as he does so on his own time, in his own place and on his own nickel. And, strange as it sounds, that will not constitute a breach of fiduciary duty.

On the other hand, that employee can be held liable – even post-termination – if his employment contract had a non-compete agreement that is both reasonable in duration and geographic scope, and bars solicitation, or poaching of his employers’ clients or other employees.

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