The Power of Intent When Forming a Contract

The Eighth District Court of Appeals recently issued a decision in the case Michael A. Girard, Inc. v. Haffke (2013-Ohio-168) where the court examined the extent of the parties’ intent when they entered into a contract. The court found the contract clearly showed the intent of the parties and, because of that, it was able to determine that a breach of contract had occurred.

Michael A. Girard, Inc. (operating as Childcare Solutions) is a placement service for nannies. Robert and Louise Haffke sought out Childcare Solutions’ services and entered into a written contract with the company in which they were obligated to pay a search fee of $170 in the hopes that Childcare Solutions would be able to procure a nanny for them. In the event a nanny was found and hired by the Haffkes, Childcare Solutions would earn an additional placement fee.

Childcare Solutions obtained a nanny for the Haffkes and they made her an offer of employment, which she accepted. As a result, a $2,106 placement fee was charged to the Haffkes’ credit card. The nanny then had a four-hour meeting with the Haffkes to review the details of her employment and was paid for her time. Shortly after that meeting, the Haffkes changed their minds and advised Childcare Solutions that they would not need the nanny’s services. The Haffkes requested a refund of the placement fee. Childcare Solutions refused, but did offer a credit for future services.

The Haffkes disputed the charge with the credit card company. The charges on the credit card were initially reversed but later reinstated. As a result of this, Childcare Solutions alleged it was damaged in the amount of $259 for fees associated with the dispute. Litigation ensued.

At the trial level, the court found that there was ambiguity in the contract entered into by the Haffkes and Childcare Solutions. This ambiguity centered on when, during the course of the relationship, the Haffkes would be obligated to pay the placement fee. Due to this ambiguity, the trial court determined that the ambiguity was to be construed against Childcare Solutions and the Haffkes were victorious at that level.

Upon appeal, the Eighth District Appellate Court found at least four different areas in the contract clearly stating when the placement fee would be due. More specifically, the implication of these areas was that the Haffkes owed the fee. The Eighth District found fault with the trial court for holding the ambiguity against the drafter of the contract, Childcare Solutions, rather than examining the whole document to determine if the court could clarify the meaning of the agreement. The presence of these four areas convinced the Eighth District that the intent of the parties was clear.

The court also noted that the Haffkes failed to dispute the assertions made by Childcare Solutions early on when it acknowledged the Haffkes hiring a nanny. The court also noted that since Mr. Haffke, who is an attorney and graduated in the top 10 percent of his class from law school, should have had a full understanding of the terms and conditions of the contract. It also was clear that the Eighth District did not appreciate the Haffkes’ parsing of words. Despite having paid the nanny for four hours of her time, the Haffkes argued that they had not “used” her services, therefore, should not have been liable for the placement fee.

The Eighth District reversed the trial court and ordered that Childcare Solutions be awarded its damages.

The import of this case is not only the significance of clear contractual drafting, but also how crucial it is to make sure that the intent of the parties is clearly stated in a contractual document. Because Childcare Solutions’ contract made repeated references to when payment would be due, the court was able to rule in its favor. Had Childcare Solutions used a contract that was not so explicit, it very well may have lost its argument.