Should yoga teachers have employment contracts? If so, what constitutes a legally binding contract? What’s the best way to avoid mistakes and misunderstanding?
From the column in Yoga Journal’s My Mentor newsletter:
Should legally binding contracts have any place in a yoga studio? Some yoga teachers may object to signing contracts because they feel the relationship between the studio (or gym, or other institution) and yoga teacher, like the relationship between yoga teacher and student, is sacred and beyond reproach. Such relationships ought to be healthy, and sufficiently full of trust that legal agreements are unnecessary.
This argument has appeal, but it is important to remember that legal rules and contracts already cover a host of relationships within the yoga studio. Apart from dealing with teachers, studio owners have all sorts of legal obligations whose violation–whether intentional or otherwise–could lead to a lawsuit. These can include a lease on the studio or mortgage on the building, insurance policies, business partnerships, and more.
Given the yoga studio’s existing participation in a variety of legally binding agreements, contracting for services with yoga teachers is a logical extension of the notion that contracts are a necessary part of the business of yoga. A contract clarifies legal rights and duties–within the business context, what each side has the right to demand and expect of the other. Further, since professional relationships can change over time, concretizing rights and obligations in writing can help establish the rules and boundaries between the parties, rather than leaving these up to the vagaries of how well people get along over time.
Before going into the specifics of items that a yoga teacher’s contract should or should not include, let’s look at the legal impact such contracts can have on the relationship between the studio and the teacher.
LEGALLY BINDING CONTRACTS
In negotiating contracts, it is important for both yoga teacher and studio to know when the exchange about hiring the teacher is just a conversation, and when it becomes legally binding. What makes an agreement legally binding? By law, a contract has three elements: offer, acceptance, and consideration–a legal term that means both sides must get something in exchange for what they give. An offer alone does not create a legally binding agreement; the offer must be accepted, and the deal must be supported by consideration.
Let’s look at each of these. An offer is a statement that manifests an intention to enter into a legally binding agreement. Neither an invitation to make an offer (“I’m going to make an offer to hire you as a yoga teacher in my studio”) nor a statement of a willingness to make an offer (“I’m interested in hiring you to teach”) constitutes a legally sufficient offer.
Next, the acceptance: an indication that the offer is absolutely accepted. “That sounds like a good deal” is not acceptance. The acceptance must be clear, unequivocal, unconditional, and made by the person to whom the offer is intended. The acceptance must also be made before the offer expires. A counteroffer (“I’d like to teach in your studio, but I need at least $10 a student”) is not an acceptance–rather, it is a new offer than can be accepted (or not). On the other hand, clear statements such as “We have a deal” or “I accept” do constitute acceptance.
Finally, the legal element of consideration: a bargained-for exchange must occur. A classic definition of consideration is: some right, interest, profit, or benefit accruing to the one party or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. For example, the consideration might be the yoga studio’s payment to the teacher in exchange for the teacher leading classes. The studio forbears the money while the teacher forbears the time teaching.
Consideration does not always mean money received for work, however. The volunteer yoga teacher who gets college credit for teaching is receiving a bargained-for exchange; the element of consideration is therefore satisfied. A gift, in which the donor does not ask for anything in exchange for the donation, lacks consideration. Thus, promises made by a donor (“I’ll teach for free for two weeks”) are not enforceable. In short, to know you have a valid contract, be sure you have a valid offer, valid acceptance, and valid consideration.
PUT IT IN WRITING
It must be pointed out that the legal elements of a contract–offer, acceptance, and consideration-are not always straightforward. These elements can go awry when the parties fail to manifest essential agreement. One area in which agreement can get fouled up is that of “mistake.” The classic case involved two parties contracting for sale of a supposedly barren cow. The cow, though, turned out to be pregnant, and was worth much more than the agreed-upon sale price. The court decided that if both parties thought the cow was barren, the contract would be voidable (meaning that either side could cancel the contract) on grounds of mutual mistake.
Most contracts with yoga teachers are for cash and not cows, but there can be mistakes about essential terms if the parties leave things too informal. The best way to avoid mutual mistakes is to ensure the legal agreement is in writing. Although some oral contracts are enforceable (we’ll further discuss these in Part Two of this series), it is always best to set forth the essential terms of the agreement in plain, written English that is understandable to both sides. A longer document is not necessarily a wiser one, nor do rhetorical flourishes and Latin phrases improve a contract. And copying a form off the Internet can have hidden pitfalls as there may be specific provisions that tilt the bargain too far on one side or another (we’ll discuss these in Part Three).
The purpose of the employment contract is to set forth each side’s duties and obligations, including the criteria by which the employee’s performance will be measured, the reasons for termination, what may happen in the event of termination, and conflict resolution mechanisms, if any. Staying fuzzy about the promises exchanged is unnecessary, distracting, and unhelpful.
Think of the contract in terms of yogic principles: clarity rules. Patanjali wrote that when the thought waves of the mind are stilled, we rest in our essence, which is bliss. Little roils up the thought waves of the mind like the prospect of a lawsuit, or trying to figure out one’s legal rights and obligations because the contract is unclear. So the first word of advice to the yoga studio or teacher contemplating an employment contract: read the document carefully and be sure you understand every provision. If something is unintelligible, rewrite it (or ask your lawyer to rewrite it) in plain English so it is easily understandable. “Don’t worry about that phrase” is not a satisfactory response to any question.
As Jonathan Swift wrote, “Promises and piecrust are made to be broken.” That’s the best reason to embody a promise of employment in a legally binding contract, and to be savvy about the way the contract terms might shape the yoga teaching experience.
Michael H. Cohen, J.D., M.B.A. is Principal in the Law Offices of Michael H. Cohen and the publisher of the Complementary and Alternative Medicine Law Blog (www.camlawblog.com). The materials in this website/e-newsletter have been prepared by Michael H. Cohen, J.D., M.B.A. and Yoga Journal for informational purposes only and are not legal opinion or advice. Online readers should not act upon this information without seeking professional legal counsel.