Ohanian v. Avis Rent A Car System, Inc.

Ohanian v. Avis Rent A Car System, Inc. case was decided in the US Court of Appeals, 2^nd Circuit on 25 November 1985 (Blog De Arturodiazf, 2022). The parties of the case are Avis Rent A Car System (Avis), the defendants, and Robert Ohanian, the plaintiff. Avis Rent A Car System, the defendant, took the case to the courts of appeal to appeal the decision that had been arrived at by the Jury Verdict in the New York Eastern District. The jury had awarded $304 693 of damages to Robert Ohanian for lost pension benefits and wages due to the defendant’s breach of the lifetime contract that the defendant had made orally to the plaintiff (Blog De Arturodiazf, 2022). The jury further gave Ohanian $23 100 in moving expenses and bonuses that were not dependent on the oral contract. Avis appealed the ruling because the alleged oral agreement was barred by the fraud statute and is considered by law not admissible in the parole evidence rule. Additionally, the oral evidence is considered insufficient to be an assurance of lifetime employment.

The plaintiff Robert Ohanian started working for the defendant Avis Rent A Car System in 1967 (Blog De Arturodiazf, 2022). As a result of his brilliant performance, He quickly progressed in the ranks. Robert Ohanian wanted job security, and he asked the general manager of Avis about it. Consequently, he was orally promised by Robert Mahmarian, the general manager, that he would have lifetime employment in the company unless he did a terrible job for the company (Blog De Arturodiazf, 2022). However, without Ohanian’s knowledge, he ascended a relocation expense plan with provisions stating that he or the defendant could terminate the employment contract. Eight months later, after the plaintiff had signed the relocation expense plan, he was fired without severance pay.

The action of the defendant to fire Ohanian without severance pay was unethical, and it goes against the ethical theory of utilitarianism. Utilitarianism is a theory that advocates for the performance of actions that cause pleasure and happiness and the shunning of activities that cause harm (Investopedia, 2022). The plaintiff, Robert Ohanian, had been a good employee of the defendant and did not deserve to be fired without severance pay. Moreover, the defendant should have upheld the oral agreement of lifetime employment for the defendant rather than incorporating a clause in the relocation expense plan that would result in the termination of the plaintiff’s job at any time.

The court ruled that the fraud statute did not prevent the oral employment contract from being valid. The regulation of fraud is to increase the barrier to fraud when the parties attempt to establish particular legal transactions that are considered susceptible to mistake, deception, and perjury (Blog De Arturodiazf, 2022). The court affirmed that the previous jury that presided over the case was correct in arriving at its conclusion. The jury had considered the oral employment contract for lifetime employment valid due to the evidence. District judge Wyatt gave the dissenting opinion on the case. The judge considered the oral lifetime employment contract claimed by the plaintiff as void under the fraud statute in New York. The dissenting judge viewed the decision of the other judges to be in error and unfair to the defendant due to the way the case was carried out. The trial judge’s instructions to the jury and the way particular questions were submitted to the jury were quite unfair. The judge pointed out that the words “just cause” were never used in the contract that Ohanian signed that allowed him to terminate the employment at any time but allowed the defendant to terminate under just cause (Blog De Arturodiazf, 2022). The judge also stated that the termination of work was not a violation of the oral contract since the contract allowed for the plaintiff’s termination if he “totally screwed up.”

The court’s decision to consider the oral agreement valid is advantageous to businesses because employees’ and employers’ oral contracts become legally binding, eliminating instances where bluffs mislead individuals in a business environment. Considering the oral agreement as lawfully binding creates room for perjury and deception in the workplace, and consequently, an unhealthy business environment is reared.

An organization that is not a party to the case is affected since the organization’s employees are bound to be motivated to bring legal action against unfulfilled oral contracts. The court’s ruling affects my organization’s policy and decision-making. The organization is forced to incorporate specific clauses in the organization’s constitution to control the rampancy of oral contracts that might result in the organization being held culpable before the law if it fails to deliver on the promise. The legal dimension of the organization is advanced by creating rules guiding employment contracts by mandating the use of written agreements. The ethical sphere is increased by ensuring that employers and employees are honest with each other and fulfill their promises in upholding their contract to embrace utilitarianism.

References

Blog De Arturodiazf”. 2022. “Ohanian V. Avis Rent A Car System, Inc. Blog.Pucp.Edu.Pe. http://blog.pucp.edu.pe/blog/nortenciogua/2018/08/24/ohanian-v-avis-rent-a-car-system-inc/.

 Investopedia. (2022). Utilitarianism Definition. Retrieved 27 September 2022, from https://www.investopedia.com/terms/u/utilitarianism.asp#:~:text=Utilitarianism%20is%20a%20theory%20of,of%20society%20as%20a%20whole.