Connecticut Apellate Court Voids Employment Agreement for Lack of Consideration

In a recent decision, the Connecticut Appellate Court voided an employment contract because the employee received no benefit by signing the agreement. In the case of Thoma v. Oxford Performance Materials, Inc., the plaintiff employee was presented with an employment contract by the defendant employer which provided her with a two year term of employment with six months’ severance if she was terminated prior to the completion of the two year term. She also was bound to a six month post termination non-competition agreement. This employment contract was presented to the employee at the request of a prospective investor in the employer who wished to have some assurance that the employee would stay with the employer for a fixed period of time.

After the employee signed the first employment agreement presented to her by her employer, a different potential investor asked the company to present the employee with a less generous contract. The employee was then given a new employment contract where she was terminable at will with no offer of severance. The second agreement also contained a somewhat ambiguous non-competition clause. When presented with this second agreement, the employee signed it.

After her employment was terminated, the employee brought suit against her former employer claiming that the first, and not the second, employment agreement should be enforced. The trial court and the appellate court agreed with her, reasoning that the employee was not given any benefit when she agreed to sign the second less generous contract.

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