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Tom Stilp JD, MBA/MM, LLM, MSC
Ordinarily, the answer has been no. Two reasons are often given: First, everyone is presumed to know the law, or at least be evenly situated in terms of access to information about the law (raising the old adage that ignorance of the law is no excuse); and second, no one, at least without special training, is expected to know the law any better than anyone else. Thus, a representation about the status of the law in a contract is merely a statement of opinion, and is not actionable (that is, one party cannot sue another over it).
In a federal Seventh Circuit case, however, one party’s representation about the validity of a six (6) year equipment lease, where the local law allowed only five (5) years, the Court wasn’t so sure.
The Court said in Lyon Financial Services vs. Illinois Paper and Copier Company that: “While someone must assume the burden of knowing the law and ensuring that the parties’ contract and dealings comply with it, we see no particular reason why the contracting parties cannot allocate that task to one or the other of them. . . Why not, then, allow contracting parties to allocate the task of legal compliance and the corresponding risk (i.e., the financial cost) of noncompliance? Or from a different perspective, why not allow one party to hold itself out as the comparative legal expert and allow both parties to acknowledge information asymmetry?”
If it is possible for contracting parties to now be bound by statements in contracts concerning legal issues, it is more important than ever that an attorney review your company’s documents.
Can an employee seek “front pay”?
Answering a question that has not yet been addressed by the Illinois Supreme Court, the federal District Court determined that an employee might seek “front pay” in Dugas-Filippi vs. JP Morgan Chase.
By definition, “front pay” is the future earnings an employee would have received if allowed to remain in his or her position. Front pay is a form of expectation damages that is defined as future earnings.
Dugas-Filippi was employed by JP Morgan. She claimed her supervisor authorized a leave of absence with pay. When Dugas-Filippi returned to work, however, she was told she had to pay back the wages she received during her leave of absence or be fired.
Dugas-Filippi sued. According to the Court, “the Illinois Supreme Court would not categorically prohibit the recovery of front pay in wrongful termination cases where a plaintiff asserts a claim of promissory estoppel to the extent that equity so demands.”
Dugas-Filippi was allowed to proceed with her case against JP Morgan. The case represents a novel type of claim that can arise in employment litigation. The case also emphasizes the importance of consulting with legal counsel so that easily resolvable matters do not become federal lawsuits.
