Legal Question in Business Law in California

I am curious if I am legaly bound to repaying a signing bonus? Is a signed offer letter considered a contract in the state of California? In no form did the offer letter state the word 'contract' but the offer letter mentions 'terms'.

I was asked to sign a promissery note when I left the company but did not agree to sign the promissery note for repayment.

Key language in the offer letter:

Repayment of Signing Bonus:

If you resign your employment within 36 Months of your hire, you will be required to repay Company XYZ the pro-rated value of the signing bonus paid to you. Repayment is due within one month of separation from the company.

Acknowledgement and Acceptance:

I agree to the terms of the offer of employment by Company XYZ

Signed Me


Asked on 4/13/16, 11:34 am

2 Answers from Attorneys

Edward Hoffman Law Offices of Edward A. Hoffman

The legal definition of an "offer" is a proposal which allows the other party to form a contract by accepting it. You describe the document as an "offer letter," and admit that you accepted its terms. Whether the letter qualified as an offer will depend on all of its text, not just the clause you quoted.

Assuming that you formed a contract by accepting a valid offer, and that the contract requires you to repay your signing bonus if you leave early, the fact that you didn't sign a promissory note when you left did not release you from your deal. A signed note might have made it easier for the company to enforce the contract, but the lack of one has nothing to do with whether you have a contract in the first place.

The fact that the document was written as a letter is not important. Neither is the fact that it didn't include the word "contract." The rules governing what is or isn't a contract are about substance, not form. After all, a contract is an agreement and not a physical object. (That's why there is such a thing as an oral contract, though the law requires some types of contracts to be in writing and sometimes treats oral contracts differently.) A written document can contain a contract's terms, but it is not the actual contract. That's why the form of the document doesn't particularly matter.

Nothing you have written suggests that the document fails to qualify as a contract, but it might. Even if the contract is valid, some or all of it might be unenforceable. And even if this provision would normally be enforceable, there may be reasons why the company can't enforce it in this particular case.

Feel free to contact me if you'd like to discuss your situation further. Whether it's me or someone else, you should consult with a lawyer to find out whether the agreement is a binding contract and what options you may have.

Good luck.

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Answered on 4/13/16, 12:46 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I agree. The offer letter was a "legal" offer. An offer invites acceptance. Once validly accepted, the offer becomes a contract. Law students learn this on day one of contracts class.

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Answered on 4/13/16, 1:24 pm


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