Fortune v. National Cash Register
Citation and Court
Fortune v. National Cash Register Co., 373 Mass. 96 (Mass. 1977)
Facts
Orville Fortune was a long-term salesperson for NCR whose compensation was largely based on commissions. Shortly after Fortune secured a large order—but before the full commission vested—NCR terminated his employment. NCR then collected the commission on the order Fortune had procured. Fortune sued, alleging that the termination was timed to deprive him of earned commissions in breach of an implied covenant of good faith and fair dealing.
Issue
Whether an employer who terminates an at-will employee in order to deprive him of commissions he had effectively earned breaches an implied covenant of good faith and fair dealing.
Holding
The Massachusetts Supreme Judicial Court held that NCR’s termination of Fortune violated the implied covenant of good faith and fair dealing, and Fortune was entitled to the commissions on the order he had secured.
Rule / Doctrine
Every contract, including at-will employment agreements, contains an implied covenant of good faith and fair dealing. Terminating an employee in bad faith—specifically to deprive him of compensation he had earned or was on the verge of earning—breaches that covenant.
Significance
A landmark case recognizing the implied covenant of good faith in at-will employment. Establishes that the at-will doctrine does not give employers license to terminate for the specific purpose of defeating a contractual benefit to which the employee was entitled. Influential in shaping employment law in Massachusetts and discussed widely in contracts casebooks.