Case Study When qualified applicants are scarce, recruiting becomes extremely co

Question

Case Study

When qualified applicants are scarce, recruiting becomes extremely competitive, particularly when two companies go after the same candidate, as often happens in the case of searching for professionals. After interviewing three short-listed candidates, a high-tech company, Com- pany X, made an offer to one and advised the other two candidates that they were unsuccessful. The successful candidate was given one week to consider the offer. The candidate asked for a week’s extension to consider the offer but was granted only an additional three days. At the end of the time period, the candidate verbally accepted the offer and was sent a contract to sign. Rather than returning the signed contract, the candidate informed Company X that he had accepted a position at Company Y. He had received the second offer after verbally accepting the first position at Company X. The second company knew that the candidate had verbally accepted Company X’s offer. Before accepting Company Y’s offer, the candidate had consulted a respected men- tor who advised him to ignore his verbal commitment to Company X and to accept Company Y’s offer. There were no substantial differences in the salaries being offered by each company or in the work that each would expect the candidate to perform. The candidate simply saw Company Y as the more prestigious of the two employers.

Questions

Does a verbal acceptance constitute a legal and binding contract?

Explanation / Answer

Verbal/Oral acceptance are generally legal and legally binding only if they are sensible, reasonable and made in good faith. Mostly people associate contracts with permitted documents written on paper signed and stamped by solicitors, however, only a few types of contracts are required by law to be written.
Verbal acceptance are often looked carefully as they incline to cause complications when it comes to enforcement. Acceptances that are clearly presented in black and white are easier to present as evidence in court than the testimony and it is also challenging to dismiss contract flaws when they are not in writing. When verbal acceptance is taken into the court, there is always a risk of one of the parties lying about the terms of the arrangement. In most cases, all parties may choose to be dishonest about the terms of the acceptance.

A verbal acceptance can constitute a legally binding contract only by integrating the following factors:

•   Mutual understanding between both parties are in line with what they are agreeing to.
•   Proposal and acceptance, meaning that one party is proposing something that the other party may accept it under certain conditions.
•   Common consideration, which means that there must be an exchange of an offer.
•   Last but not the least: Good faith, which means that the parties should not attempt to enter into a verbal acceptance to cheat each other or to break the law.

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