CEOs often work under a contract with the company rather than as an at-will employee. To understand the possible resolutions for a mistake in CEO’s contract, it is helpful to understand some basics of contract law because fundamentally, the answers are the same.
How are mistakes fixed in normal contracts, then?
A mutual mistake is one made by both parties in a contract. If that is the case, then a court can allow the parties to amend the contract to the proper terms. Another option is voiding the contract and starting over.
More troubling and difficult to resolve are unilateral mistakes. These are mistakes that only one party realizes while the other does not. These sorts of mistakes can often lead to an imbalance of power between the parties, which is never conducive. Since the law assumes that all parties have read all the terms of the contract, the law requires another argument, such as unconscionability, to void it.
How would a mistake hurt a CEO?
There can be any number of terms that could hurt a CEO in terms of a contract. It could be regarding the terms of ending the contract. It could be about compensation. It could be about oversight.
While most CEOs understand business growth and leadership well, they may not understand the more specific details of finance and contract language. Skilled outside counsel, however, can offer detailed, considered legal guidance for resolving any errors in a contract.
Full understanding of the contracts you sign
While contracts with a CEO are fundamentally different in terms of power and compensation than most employment agreements, they are still contracts. And all contracts are subject to human error. They should also be subject to humane resolution.