Story Case

Amos Hendy, an accountant, signed a contract to work for the Northern Securities Company for one year at two hundred dollars a month. In this contract, which was also signed by the company, there was a clause stipulating that the company would not make extra payment for work done at night or on holidays, unless there was a written agreement between the president of the company and the employees concerning the extra remuneration.

After he had been engaged in his duties two months, the secretary asked Hendy to work for ten nights during a period of unusually heavy work, and promised that the company should pay him an additional sum for this extra labor. Later, the company refused to pay for this work on the ground that no agreement was made in writing and signed by the president. Can Hendy compel payment?

Ruling Court Case. Gotch Vs. Abbott, Volume 13 Maryland, Reports, Page 314; Volume 21 American Decisions, Page 635

Gotch, the plaintiff in this action, contracted with Abbott to erect a mill for him. He guaranteed to erect a mill with the necessary boilers, elevators, and rubber, that would grind the best wheat flour. Abbot, on his part, promised to pay him five thousand dollars for the work when completed. In the contract there appeared this agreement; "No extra charges to be made unless a written agreement be made and attached to this contract." During the course of construction, Gotch put in much extra work in erecting the mill. Abbott was aware of the extra work, but nothing was said to him concerning any compensation therefor and no written agreement was made by them in reference therefore.When Gotch had finished the mill he claimed $400 for extra work necessary in the erection of the building and not provided for in the original contract. Abbott refused to pay the sum demanded, and suit was brought for it. Abbott contended that he could not be held liable for that amount as extra charges, because their contract provided that extra charges could be made only when provided for in a written agreement to be attached to the original contract.

Decision

Although, as a general rule, a contract is not required to be in writing, the parties may stipulate that a given contract, or a portion thereof, shall be reduced to writing. If they do enter into such an agreement, the agreement is binding unless both parties agree to rescind the same. In this case, by their original contract, it was expressly agreed that Gotch was to receive no extra charges for additional labor or material, unless there was an agreement made in writing and attached to the original contract. It did not appear that they had waived such an agreement and there was no written contract for the extra charges claimed by Gotch. Therefore, the court held that Gotch could not recover.

Ruling Law. Story Case Answer

Although, most contracts may be oral, nevertheless, parties may and often do, stipulate that certain contracts must be in writing in order to be binding. Where the parties have so agreed, obviously such an agreement will be binding upon them. But they may at any time waive the contract and consent to an oral agreement. The obligation to reduce their contracts to writing is binding only so long as both wish. As they may voluntarily agree upon such a formality, they may likewise agree to dispense with it.

In the Story Case, Henry cannot compel payment of the extra remuneration because he had previously bound himself not to expect or demand any extra compensation, unless he possessed a written contract.