Contracts Case No. 42 Iohn William Costello Appellate Division, First Department

Question

Contracts Case No. 42 Iohn William Costello Appellate Division, First Department 99 A.D.2d 717, 472 N.Y.S.2d 324 (1984) FACTS: John William Costello Associates, Inc. (Costello) is an employment agency. Its president, Edward Nottage (Nottage), wrote to Boris Gresov (Gresov), the president of Metals Corporation (Standard), suggesting that Gresov might want to interview o as a prospective employee. Soon thereafter Nottage received a phon a client of Costell call from Gresov's assistant, Mary Di Rienzo (Di Rienzo), who expressed an interest in the client. Nottage informed her that, if the client was hired, Costello's fee would be 30% of the client's first year salary. In due time a phone interview was scheduled between Costello's client and Gresov. Costello sent a letter confirming the interview and the 30% fee. Standard did not sign a written contract with Costello agreeing to the 30% fee. Standar first-year salary. Standard refused to pay, arguing that it never agreed to pay a 30% fee. d hired Costello's client and Costello sent Standard a bill for 30% of the client's ISSUE: Where a written offer is submitted and no written acceptance is received, and the offeree utilizes the benefit proposed in the offer, does a contract exist? DECISION: Yes, judgment for Costello. REASONING: An acceptance of a written offer does not have to be in writing or even expressed. The acceptance can take the form of conduct or acquiescence. In this case, Standard did not reject the offer. Instead, it accepted the benefits of Costello's services by interviewing and ultimately hiring Costello's client. This conduct constitutes an acceptance of Costello's offer to refer a potential employee in exchange for a 30% fee if the person was hired. *QUESTION (See back of text for answer) ) How might Costello have avoided the problem in this case?

Explanation / Answer

Costello could have avoided the problem initially itself when they did not receive the signed contract from Standards. Costello could have done a follow up to sign a contract between Costello and Standards specifying the 30% fee. A signed contract is a valid contract and Standards would not have refused to pay the fee. In this case, Costello assumed that Standards would pay the 30% of the first year salary of its client wherein Standards did not keep up to the assumptions. No business runs on assumptions and oral promises. Hence, it is mandatory that the terms and conditions be in a written format signed by both the parties, in this case Costello and Standards. A signed contract is a mutual agreement between the two companies i.e., Standards to pay for the services rendered by Costello.

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