Law for Business 12th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 6

Cottey was working for a hospital when it was merged with another company. He was offered an attractive financial package in order to get him to stay. Part of it was a plan that provided a large bonus when the plan fully vested in the sixth year. He was not given a written description of the plan or told that it could be rescinded by the company at its discretion. It was rescinded three years later, but Cottey continued to work for the company until he was fired for allowing a female dancer to perform for a doctor's birthday party in an operating room. Cottey sued and claimed, among other things, that he was fraudulently induced to enter the employment contract with the company. The company argued that a misrepresentation cannot occur by silence. Who is correct and why?