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Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller
Edition 13ISBN: 978-1133046783Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller
Edition 13ISBN: 978-1133046783 Exercise 16
A Question of Ethics: Unilateral Contracts.
![A Question of Ethics: Unilateral Contracts. International Business Machines Corp. (IBM) hired Niels Jensen in 2000 as a software sales representative. According to the brochure on IBM's Sales Incentive Plan (SIP), the more you sell, the more earnings for you. But the SIP program does not constitute a promise by IBM. IBM reserves the right to modify the program at any time. Jensen was given a quota letter that said he would be paid $75,000 as a base salary and, if he attained his quota, an additional $75,000 as incentive pay. Jensen closed a deal worth more than $24 million to IBM. When IBM paid him less than $500,000 as a commission, Jensen filed a suit. He argued that the SIP was a unilateral offer that became a binding contract when he closed the sale. [Jensen v. International Business Machines Corp., 454 F.3d 382 (4th Cir. 2006)] (See page 228.) (a) Would it be fair to the employer for the court to hold that the SIP brochure and the quota letter created a unilateral contract if IBM did not intend to create such a contract? Would it be fair to the employee to hold that no contract was created? Explain. (b) The Sales Incentives section of IBM's brochure included a clause providing that management will decide if an adjustment to the payment is appropriate when an employee closes a large transaction. Does this affect your answers to the above questions? From an ethical perspective, would it be fair to hold that a contract exists despite these statements? Why or why not?](https://d2lvgg3v3hfg70.cloudfront.net/SM2127/11eb99e8_2d42_15a6_886f_f1127e9ff508_SM2127_00.jpg)
International Business Machines Corp. (IBM) hired Niels Jensen in 2000 as a software sales representative. According to the brochure on IBM's "Sales Incentive Plan" (SIP), "the more you sell, the more earnings for you." But "the SIP program does not constitute a promise by IBM. IBM reserves the right to modify the program at any time." Jensen was given a "quota letter" that said he would be paid $75,000 as a base salary and, if he attained his quota, an additional $75,000 as incentive pay. Jensen closed a deal worth more than $24 million to IBM. When IBM paid him less than $500,000 as a commission, Jensen filed a suit. He argued that the SIP was a unilateral offer that became a binding contract when he closed the sale. [Jensen v. International Business Machines Corp., 454 F.3d 382 (4th Cir. 2006)] (See page 228.)
(a) Would it be fair to the employer for the court to hold that the SIP brochure and the quota letter created a unilateral contract if IBM did not intend to create such a contract? Would it be fair to the employee to hold that no contract was created? Explain.
(b) The "Sales Incentives" section of IBM's brochure included a clause providing that "management will decide if an adjustment to the payment is appropriate" when an employee closes a large transaction. Does this affect your answers to the above questions? From an ethical perspective, would it be fair to hold that a contract exists despite these statements? Why or why not?
International Business Machines Corp. (IBM) hired Niels Jensen in 2000 as a software sales representative. According to the brochure on IBM's "Sales Incentive Plan" (SIP), "the more you sell, the more earnings for you." But "the SIP program does not constitute a promise by IBM. IBM reserves the right to modify the program at any time." Jensen was given a "quota letter" that said he would be paid $75,000 as a base salary and, if he attained his quota, an additional $75,000 as incentive pay. Jensen closed a deal worth more than $24 million to IBM. When IBM paid him less than $500,000 as a commission, Jensen filed a suit. He argued that the SIP was a unilateral offer that became a binding contract when he closed the sale. [Jensen v. International Business Machines Corp., 454 F.3d 382 (4th Cir. 2006)] (See page 228.)
(a) Would it be fair to the employer for the court to hold that the SIP brochure and the quota letter created a unilateral contract if IBM did not intend to create such a contract? Would it be fair to the employee to hold that no contract was created? Explain.
(b) The "Sales Incentives" section of IBM's brochure included a clause providing that "management will decide if an adjustment to the payment is appropriate" when an employee closes a large transaction. Does this affect your answers to the above questions? From an ethical perspective, would it be fair to hold that a contract exists despite these statements? Why or why not?
Explanation
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Verified
a.
No, it would not be fair to the emplo...
Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller
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