No contract means no fee


Recruiters and employer clients alike shudder at the story of nine agencies that all sent the same candidate to the same employer and all claimed a fee. It might be an urban myth, but it comes awfully close to reality on far too many occasions.

The Recruitment and Consulting Services Association’s professional code requires certainty about all aspects of the engagement of a recruitment agency. The message that it has been spreading to its members is a simple one: no contract, no fee. In some states and territories (Queensland, ACT, South Australia and Western Australia), contracts for certain employment agent services have to be in writing, or at least terms need to be disclosed in writing before services are provided. In others (New South Wales, Victoria, Tasmania and Northern Territory) verbal agreement is sufficient.

Genuine agreement about the services being offered and the fees payable is needed on both sides of the transaction. Disagreement may mean that there is no contract. Consideration (ie, something of value) has to pass in exchange for performance of a party’s obligations before there can be a contract. It might be the fee (or at least a promise to pay it). If there is no consideration to support the agreement, there will be no contract.

Acceptance

An offer must be accepted in the terms in which it was offered before a contract is formed. Acceptance must be communicated by express words or by conduct that unambiguously refers to the terms of the offer. Sometimes parties attempt to create contracts out of thin air using a provision such as: ‘You will be deemed to have accepted our terms of business if you interview our candidate.’

One cannot deem a contract to come into existence and then treat it as though it has if there was no genuine agreement. A better provision would be: ‘These terms of business apply if you tell us you have accepted them.’

There is no contract unless the parties have legal capacity to make it. The contract must also be for a lawful purpose. A recruitment contract to provide forced labour might be one that would fail on this requirement. Uncertainty about who is going to do what for whom, when and for how much can result in its terms are too meaningless or vague to be enforced.

Costly recruitment disputes often arise from sloppy contracting practices, uncertainty about the services to be provided, unrealistic claims of candidate or job ownership. Preferences for contingent fees and the desire to send (or receive) as many resumes as possible without regard to the contractual consequences can turn a recruitment exercise into a nightmare. However, with some basic care many common problems can be avoided so that all parties can benefit from working together on the basis of agreements in which they can have confidence.

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No contract means no fee


Recruiters and employer clients alike shudder at the story of nine agencies that all sent the same candidate to the same employer and all claimed a fee. It might be an urban myth, but it comes awfully close to reality on far too many occasions.

The Recruitment and Consulting Services Association’s professional code requires certainty about all aspects of the engagement of a recruitment agency. The message that it has been spreading to its members is a simple one: no contract, no fee. In some states and territories (Queensland, ACT, South Australia and Western Australia), contracts for certain employment agent services have to be in writing, or at least terms need to be disclosed in writing before services are provided. In others (New South Wales, Victoria, Tasmania and Northern Territory) verbal agreement is sufficient.

Genuine agreement about the services being offered and the fees payable is needed on both sides of the transaction. Disagreement may mean that there is no contract. Consideration (ie, something of value) has to pass in exchange for performance of a party’s obligations before there can be a contract. It might be the fee (or at least a promise to pay it). If there is no consideration to support the agreement, there will be no contract.

Acceptance

An offer must be accepted in the terms in which it was offered before a contract is formed. Acceptance must be communicated by express words or by conduct that unambiguously refers to the terms of the offer. Sometimes parties attempt to create contracts out of thin air using a provision such as: ‘You will be deemed to have accepted our terms of business if you interview our candidate.’

One cannot deem a contract to come into existence and then treat it as though it has if there was no genuine agreement. A better provision would be: ‘These terms of business apply if you tell us you have accepted them.’

There is no contract unless the parties have legal capacity to make it. The contract must also be for a lawful purpose. A recruitment contract to provide forced labour might be one that would fail on this requirement. Uncertainty about who is going to do what for whom, when and for how much can result in its terms are too meaningless or vague to be enforced.

Costly recruitment disputes often arise from sloppy contracting practices, uncertainty about the services to be provided, unrealistic claims of candidate or job ownership. Preferences for contingent fees and the desire to send (or receive) as many resumes as possible without regard to the contractual consequences can turn a recruitment exercise into a nightmare. However, with some basic care many common problems can be avoided so that all parties can benefit from working together on the basis of agreements in which they can have confidence.

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