Question

A Question of Ethics-Unilateral Contracts.International Business Machines Corp. (IBM) hired Niels Jensen 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." The brochure also stated that “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 Types of Contracts.) 1. 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. 4. The Sales Incentives" section of IBM's brochure included a clause providing that management sanilldarido ifinn dimant to the namonti

Answer 1

Facts Of the Case:

International Business Machines Corp. (IBM) hired Niels Jensen as a software sales representative. He was given a "quota letter" stating that he would be paid $75,000 as a base salary and, upon attaining the quota, an additional $75,000 to be provided as incentive pay.

Issues Of the Case:

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.

Questions:

1. No, It would be Unfair to the employer for the court to hold that the SIP brochure and the quota letter created a Unilateral contract if there was no meeting of Minds as IBM did not intend to create such a contract. Moreover, IBM had also reserved a right to modify the program at any time.

It would be fair to the employee to hold that no contract was created, since there was no meeting of minds to form a Valid Contract.

2. If the IBM Brochure included a clause as stated in the question for employees closing a large transaction then in that case it would be unfair to the employee. From the ethical perspective, it would'nt be fair to hold that contract after the disclaimer regarding large transaction has been given