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Law School Case Brief

Holland v. Earl G. Graves Publ'g Co. - 46 F. Supp. 2d 681 (E.D. Mich. 1998)

Rule:

The formation of a unilateral contract typically involves a case in which an offer is made by a party which invites acceptance by performance rather than by a promise to perform. Once an offer for a unilateral contract is made, and part of the requested performance is rendered by the offeree, the offer cannot be unilaterally revoked or modified. 

Facts:

The employee's compensation package provided for a year-end bonus. The bonus was a percentage of the difference between the employee's annual net revenue goal and her actual net revenue for the year. The 1994/1995 compensation package established an annual net revenue goal of $1,342,000 for plaintiff. That goal was subsequently increased by $207,000. The employee claimed that her former employer retroactively raised the employee's revenue goal after the close of the fiscal year, impacting her bonus by $55,000. The employee brought an action against the employer, alleging breach of contract and violations of Mich. Comp. Laws Ann. § 600.2961 of the Michigan Sales Commission Act (Act). 

Issue:

Did defendant employer breach the 1994/1995 compensation agreement when it "retroactively" increased plaintiff sales associate’s quota by $ 207,000, thereby decreasing her year-end bonus by approximately $55,000?

Answer:

Yes

Conclusion:

The court granted the employee's renewed motion for summary judgment on the breach of contract claim and held that the compensation agreement was a unilateral offer that the employee would receive a bonus if her net revenue exceeded her revenue goal. Therefore, once the employee began substantially performing, the employer's offer could not be modified without the employee's consent. The evidence showed that the goal was changed without the employee's assent. Thus, as a matter of law, the employer breached the compensation contract.

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