Jeff On Call: Should I Sign a Client’s PSA

May 14, 2009


Q: Should I sign a client’s PSA (Placement Service Agreement)?

There’s some good news here. There is a common law rule that states: Any ambiguities in a contract will be construed against the maker. Common law rules are the common-sense, judge-made laws applied before we had statutes in America. They are the basic rules that have been codified into statutes by the legislatures in many states.

Some PSAs are so draconian that I advise clients to sign them without objection, since they can’t be enforced.

The most questionable provisions tend to be:

— Requirements that earned fees must be returned if a recruiter attempts to solicit from the client. (It is impossible to prove “solicitation”, this is clearly a punitive measure, and it’s one that no employer has ever successfully enforced.

— Strict compliance with “deal only through human resources” mandates where managers communicate with the recruiter. (In those cases, the client has impliedly or expressly waived its rights by conduct. A waiver is the voluntary relinquishment of a known right.)

— Searches for specific positions when the client communicates about others. Again, a waiver of the client’s right by conduct.

— Any kind of liquidated damages clause requiring payment of a specific amount upon the occurrence of some event. To be enforceable, it must be reasonable and unable to be ascertained otherwise. These are overwhelmingly rejected by the courts, since they are invariably excessive.

— Anything in a contingency-fee arrangement where no fee has been paid. The contract is illusory, nudum pactum — without consideration.


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