Breach of employment contracts - Next Generation Bar Exam

1. What is the measure of damages for an employee wrongfully discharged during a definite term?

   Salary for the rest of the term, minus amounts earned or reasonably earnable in substitute employment. The deduction reflects the employee's obligation to mitigate by seeking comparable work.

2. What test governs the enforceability of an employee's covenant not to compete?

   It must be reasonable in duration, geography, and scope and protect a legitimate employer interest. Restraints broader than needed to protect trade secrets, customer goodwill, or similar interests are not enforced as written.

3. What equitable relief will a court refuse to grant against an employee who quits in breach?

   Specific performance requiring the employee to work. Compelled personal service raises concerns of involuntary servitude and is difficult to supervise.

4. What can make at-will employment terminable only for cause in many jurisdictions?

   An express or implied promise, such as handbook assurances of termination only for cause. Courts enforce such assurances as contract terms that limit the employer's power to discharge.

5. When may an employer terminate an employee hired for a definite term before the term ends?

   For cause, such as the employee's material breach. Discharge without cause before the term ends is a breach by the employer.

6. An employee on a two-year contract is fired without cause and immediately takes an identical job at equal pay. What may she recover?

   Nominal damages plus incidental costs of finding the new job. Her substitute earnings fully offset the lost salary, leaving only incidental losses.

7. What is the employer's measure of damages when an employee quits in breach of a definite-term contract?

   The cost of obtaining a replacement in excess of the contract wage, plus foreseeable consequential loss. The employer is placed in the position it would have occupied had the employee performed.

8. What is the default rule for employment of indefinite duration?

   Employment at will: either party may terminate at any time for any lawful reason. Parties can displace the default by an express or implied agreement limiting termination.

9. A singer under an exclusive contract leaves to perform for a rival. What relief can the producer most likely obtain?

   An injunction barring the singer from performing for the rival during the contract term. A negative injunction is available when the services are unique, even though specific performance is not.

10. Under the modern view, what may an employee who quits in breach recover for services already rendered?

    Restitution for the value of the services, minus the employer's damages from the breach. This prevents unjust enrichment of the employer, though the breaching employee cannot recover the full contract price.

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