As the parent of school age children, I get asked lots of questions about all sorts of topics, most if which I know not nearly enough about. Many times these questions are on topics that I “kind of, sort of” think I know the answer, but I am not real confident in my ability to explain it to those inquiring minds. Also, they are getting old enough that I can no longer get away with just making it up. As a result, I will often do what any good parent will do: I tell the children to go look it up (or Google it….) and report back to me. That way we can all learn something.
The Indiana Court of Appeals recently dealt with a situation where it was confronted with interpreting terms that are frequently used in certain contracts, and are terms that we all “kind of, sort of” think we know what they mean, but they are certainly susceptible to some discussion about what their effect is in a contract. Specifically, the Court was asked to determine what parties to a “non-solicitation” contract mean when they agree not to “solicit” or “induce” customers or employees of each other..
In examining the issue, the Court noted that although these terms are routinely used in contracts, no Indiana case had addressed what they really mean. Therefore, because courts, like parents, cannot get away with just making something up, the Court used the tried and true method of opening up a dictionary and using the definition found in the dictionary, then applying that definition to the facts in the case.
In Enhanced Network Solutions Group v. Hypersonic Technologies Corp., (here is link to the full opinion), Enhanced argued that Hypersonic had violated an agreement not to solicit Enhanced employees. The facts were that Hypersonic posted a job position on a public portal, an Enhanced employee responded to that post, and ultimately he was hired by Hypersonic.
The Court affirmed the trial court’s decision that because Hypersonic merely responded after the employee made the initial contact, Hypersonic did not “solicit or induce” the employee. It is important to note that the contract did not prohibit Hypersonic from hiring any former Enhanced employees; those types of provisions will appear in contracts from time to time, but were not present in this case.
The import of this decision is that the words “solicit” and “induce” are in many non-competition and non-solicitation type contracts between individuals and businesses. In many instances there is some question if someone who is a party to one of those agreements is contacted first by a customer, employee, etc. of the other party, can that person even discuss anything with that customer or employee. The Hypersonic decision, which seems to employ a common sense approach of using the accepted definition of solicit or induce, would indicate that as long as the customer or employee makes the initial contact, and a party just responds to that contact, then there is no breach of an agreement not to solicit or induce.
For those businesses that want broader protection against its employees or co-contractors stealing customers or employees, just using the words solicit or induce will not be enough, and broader language should be used in the agreement.
Also, if you find yourself involved in a potential dispute about the meaning of a contract, do not hesitate to use the dictionary to look up a few of the key terms to try to determine what those really mean; you know the court will. Even better, look up those words that you “kind of, sort of” know what they mean you do not understand BEFORE signing the contract; and do your best to define terms and express the true intent of the parties; and finally do not sign any contract until you are comfortable with the terms and consequences of that agreement.