Verbal Contracts/Letter of Intent

[spuddoc]

My question relates to the rights of a person who has a signed letter of intent which is voided by the hiring party for reasons unrelated to the employee.

I am a fellow in a medical program in a major university. We are hired as clinical staff (our formal title is Assistant Clinical Instructor). We sign employment contracts and are paid in accordance with those contracts.

To enter this program we sign a letter of intent with the university promising to come, they promise us the position. This letter is usually signed a few months to a year in advance of starting work, sometimes as much as 2 years in advance. If a signer opts out, the program may seek legal action for breach of contract (or so we are told). Program lead times as a result are usually at least a year (implication is that if the program opts out the employee is out for a year or more). When we arrive we sign the employment contract.

There are two cases.

1. Dr. N graduated from a Pediatrics program in India, completed two years as a fellow here at University Hospital (UH), when it was determined that for adminstrative reasons related to his being a "foreign medical grad", not for his clinical skills, he would have to leave the program, complete on 2 years of a 3 year US pediatric residency at a nearby program, then return to complete the 3rd and final year of his fellowship at UH. He left, and will complete the peds residency, and was expected to return to UH as agreed this summer to complete that 3rd fellowship year. He was called to a meeting at UH and told that because of funding cuts the department decided (not UH) that he would not be allowed to return to UH this summer and was on his own... they essentially breached the letter of intent. He may not be able to find a program to take him for only one year, especially on such short notice and if he does will incur costs of relocation. If he does not find a program he may be deported IAW visa requirements.

2. Dr. B is a foreign medical grad who completed her pediatric residency here at UH last summer, and lives in town. Her husband is a green carded professional. She had a baby (a US citizen) and took a year off, was planned for entering the fellowhip program with Dr. N this summer. She left with a verbal promise (I am not sure if she has a signed letter of intent, but it was well known she would be returning to enter the fellowship program). She was called to the same meeting as Dr. N and told that she too would not be able to start the program as it was decided not to fund the position. She is in the same position as Dr. N.

Do they have rights protected by entering into a formal letter of intent (is there a breach of contract)?

If Dr. B does not have a signed letter of intent, but clearly was promised a position (well known at all levels of the program), is she also in a position to sue for breach of contract?

Can they sue for relocation costs since the breach necessitates a relocation that otherwise would not have occurred, or for other damages?

Thanks!

 

[Michael Wechsler]

In general, letters of intent are worth less than the paper they are written on. You need to take a look at what the letter actually states. In most cases I have seen they are non-binding letters of an intention to enter into an agreement that has not yet been formalized. It is like a term sheet where the details are agreed upon and the contract will be drafted. This may not be the case here and might be an issue of terminology but do you have the letter? It is probably the most important piece of evidence in your case.

I don't know the answer to your question and it is very fact specific. As stated above, if there is a written agreement then that will govern the relationship between the parties. It is possible that the hospital has covered itself by stating that it will provide a position if available with priority as well as remedies in the event the position does not materialize. This is all speculation because what is in the agreement will likely govern.

That said, inducement to come based upon the promise of a position is an understandable reason to want to bring suit. It is possible to sue for relocation costs under the legal theory of equitable estoppel and detrimental reliance. However, your strongest case is with written proof.

Another weapon is the press. Imagine what will happen to the hospital's reputation if it makes promises to doctors and then leaves them at the altar. It might be a good idea to prompt some negotiation and discussion about the fact that you will not go away quietly and that they should fully be able to understand and appreciate your position as people and why they would want to resolve the matter amicably.

Originally posted by spuddoc
My question relates to the rights of a person who has a signed letter of intent which is voided by the hiring party for reasons unrelated to the employee.

I am a fellow in a medical program in a major university. We are hired as clinical staff (our formal title is Assistant Clinical Instructor). We sign employment contracts and are paid in accordance with those contracts.

To enter this program we sign a letter of intent with the university promising to come, they promise us the position. This letter is usually signed a few months to a year in advance of starting work, sometimes as much as 2 years in advance. If a signer opts out, the program may seek legal action for breach of contract (or so we are told). Program lead times as a result are usually at least a year (implication is that if the program opts out the employee is out for a year or more). When we arrive we sign the employment contract.

There are two cases.

1. Dr. N graduated from a Pediatrics program in India, completed two years as a fellow here at University Hospital (UH), when it was determined that for adminstrative reasons related to his being a "foreign medical grad", not for his clinical skills, he would have to leave the program, complete on 2 years of a 3 year US pediatric residency at a nearby program, then return to complete the 3rd and final year of his fellowship at UH. He left, and will complete the peds residency, and was expected to return to UH as agreed this summer to complete that 3rd fellowship year. He was called to a meeting at UH and told that because of funding cuts the department decided (not UH) that he would not be allowed to return to UH this summer and was on his own... they essentially breached the letter of intent. He may not be able to find a program to take him for only one year, especially on such short notice and if he does will incur costs of relocation. If he does not find a program he may be deported IAW visa requirements.

2. Dr. B is a foreign medical grad who completed her pediatric residency here at UH last summer, and lives in town. Her husband is a green carded professional. She had a baby (a US citizen) and took a year off, was planned for entering the fellowhip program with Dr. N this summer. She left with a verbal promise (I am not sure if she has a signed letter of intent, but it was well known she would be returning to enter the fellowship program). She was called to the same meeting as Dr. N and told that she too would not be able to start the program as it was decided not to fund the position. She is in the same position as Dr. N.

Do they have rights protected by entering into a formal letter of intent (is there a breach of contract)?

If Dr. B does not have a signed letter of intent, but clearly was promised a position (well known at all levels of the program), is she also in a position to sue for breach of contract?

Can they sue for relocation costs since the breach necessitates a relocation that otherwise would not have occurred, or for other damages?

Thanks!

 

[spuddoc]

Thank you!

Thank you, Law Professor, for your response. There is a clause in the letter of intent that stated something to the effect that the position is offered pending the final approval of the dean of the medical school. In a very real sense, this is what they used as their escape.

I will forward your comments to my colleagues. We had advised them to seek a lawyer.