The Yoga Teacher's Employment Contract, Part 2

Should yoga teachers have employment contracts? If so, what should they be thinking about when negotiating such agreements? This column builds on Part 1 by focusing on more detailed aspects of the contracting process between yoga teachers and their employers.

By Michael H. Cohen, JD, MBA

Breach of Contract
Another important way to evaluate a contract is to think about what can happen if the other side later violates ("breaches") the contract. What makes a legally binding contract different from a set of promises is that in the event of a breach, the contract provisions can be enforced in court.

The remedy for breach of contract typically consists of money damages, in an amount intended to restore the injured party to the economic position that he or she expected from performance of the promise or promises (this is known as an "expectation measure" of damages). Because courts generally deem expectation damages sufficient, are reluctant to force people back into employment situations, they rarely order the parties to fulfill the contractual promises (a remedy known a "specific performance").

So, for example, if the studio contracts to hire a yoga teacher to teach 15 classes a week, at $40 per class, over 50 weeks, and after one month (during which the studio has paid the teacher), terminates the teacher in a way that breaches the contract, the damages will likely be 15 classes x $40 x the remaining 26 weeks, or $37,600. The law typically does not allow punitive damages—monetary recovery many times the actual amount of loss, intended to "punish" the defendant—unless there is proof of actual fraud, meaning an initial intent to deceive.

Some yoga teachers might wonder, why think about breach of contract before I even sign it—why contemplate the end of a legal relationship when it is just beginning? Understanding the remedies for breach up-front can help shed light on what will happen if the situation ultimately does not work out—thus helping one prepare contingencies and protect oneself financially in case of later trouble. Further, for many professionals, to know in advance and mentally prepare for the worst-case scenario can help not only structure the deal at the outset, but also reduce anxiety once the contract is signed, and thus contribute to a constructive professional relationship overall.

Understanding remedies can also help if, in the midst of things, a dispute arises. If, for some reason, after a period of time, either side starts thinking of walking away from the contract, it may be useful to try to stave off a lawsuit by settling. Understanding the measure of damages—what the case would be worth if the plaintiff wins—can help the yoga studio or teacher negotiate a wise settlement. And, bearing Patanjli's wisdom in mind, the best settlement is a fair one: an arrangement that does justice to all sides, and thus lets both walk away without enduring rancor.

Mitigating Damages
In addition to thinking about the ultimate remedies for breach—should the relationship deteriorate to this point—and the option of trying to negotiate a fair settlement, yoga teachers and studios should understand the legal requirement known as "mitigation of damages." This rule means that if the contract is breached, each side has a legal obligation to try to mitigate (minimize) damages flowing from the breach. In other words, the studio can't simply turn away all its students, blaming a teacher who has walked out during a misunderstanding, and pile up income loss as contractual damages; nor can the teacher in such a case simply decide not to look for new work and again, pile up damages hoping to send the studio a bill. Both sides have to do their best to recover. Keeping the rule of "mitigating damages" in mind will also help those who do find themselves in a dispute to find a fair way to settle the argument. In general, lawsuits are costly, troublesome, and taxing: it is often better to resolve disputes through cool conversations, perhaps with the help of trained mediators, than to let anger lead failed relationships to the courthouse door.

Page 1 2 3