Reference no: EM131486706

Personnel Agency (“Personnel”) and Audio Visual Installer and Developer (“Audio”) had telephone discussions and e-mail exchanges concerning Personnel’s providing Audio a “Permanent Employee, Audio Visual Technician Specialist” to develop and install multimillion dollar audio visual equipment for theaters. Personnel placed temporary employees with Audio in the past but had never placed a permanent employee with Audio. On prior occasions, Personnel charged Audio “15% of the salary of a temporary employee for as long as the employee works for a company.” The industry practice is that, if an employee placed by a personnel agency stays for more than 4 months, an agency is entitled to an upfront, lump-sum payment equal to 25% of the first year’s salary of the placed employee.

During the initial discussion, Audio’s Hiring Coordinator indicated that it wanted Personnel to provide it with a suitable candidate for hire within two weeks and offered to pay the customary, prevailing rate of 25% of the first year’s salary of the new hire plus an additional 5% bonus if hired within two weeks. Personnel said that it would use its “best efforts” to find a suitable candidate within two weeks and began sending resumes to Audio immediately. Audio did not formally respond to Personnel but reviewed all of the resumes that Personnel sent it. Three weeks later, Audio received a resume that it liked for the Specialist position and chose to interview Liz, an individual whose résume came from Personnel during the prior week. Liz had also independently submitted a résume to Audio. During one of the interviews, an Audio employee asked Liz whether any agency sent her. Liz replied “No,” and the Audio employee noted that on an interview form.

Audio’s hiring coordinator offered Liz a job for $400,000 a year based upon Liz’s interviews and her statement no agency submitted her résume. The copy of Liz’s résume the coordinator saw came from the independent résume files. The hiring coordinator was unaware Liz had been sent by Personnel. Liz accepted the offer and signed a confidentiality agreement and a non-compete clause, barring her from working for a company like Audio for 2 years.

Personnel now insists that Audio owes it $100,000.00 (25% of the first year’s salary) plus a 5% bonus for providing Audio with a suitable candidate within two weeks. Explain what Audio might contend as a legal basis in contract law for refusing to pay Personnel and whether its arguments will be successful against Personnel’s claim in contract law for the amounts owed. Analyze and assess.