Arduini v. Board of Education
418 N.E.2d 104, 93 Ill. App. 3d 925, 49 Ill. Dec. 460 (1981)
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Rule of Law:
A school board's liquidated damages policy is an enforceable term of a tenured teacher's employment contract if the teacher accepts the policy through conduct, such as continuing to work and accepting paychecks after receiving notice of the policy. Such a policy is valid if it represents a reasonable forecast of damages that are difficult to ascertain.
Facts:
- On August 6, 1979, the Pontiac Township High School Board of Education (defendant) adopted a liquidated damages policy.
- The policy stipulated that certificated personnel who resign mid-year for non-extenuating reasons must pay the district 4% of their contract salary.
- Chady (plaintiff), a tenured teacher, began his teaching duties for the 1979-80 school year on August 27, 1979.
- On September 13, 1979, Chady received a 'Contractual Continued Service Notification' stating his salary, with a copy of the new liquidated damages policy attached.
- Chady continued to perform his teaching duties after receiving this notification.
- On October 19, 1979, Chady resigned from his teaching position.
Procedural Posture:
- The Board of Education withheld $715.92, representing 4% of Chady's contract salary, from his final paycheck.
- Chady (plaintiff) filed a complaint in the trial court seeking recovery of the withheld amount.
- The Board of Education (defendant) filed a counterclaim for a declaratory judgment to determine the validity of its liquidated damages policy.
- The trial court held the policy was valid and entered judgment in favor of the Board of Education.
- Chady (appellant) appealed the trial court's judgment to the Illinois Appellate Court.
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Issue:
Does a school board's liquidated damages policy, which requires a tenured teacher who resigns mid-year to pay 4% of their contract salary, constitute an enforceable term of the teacher's employment contract when the teacher continues to work and accept pay after being notified of the policy?
Opinions:
Majority - Mills, J.
Yes, the liquidated damages policy is an enforceable term of the teacher's employment contract. First, the teacher accepted the policy as part of his contract. The board's September 13 notification constituted an offer, which the teacher accepted not by signature, but by performance—continuing to teach—and by accepting the benefits of the contract, specifically, a paycheck reflecting the new salary. Second, the board had the authority to implement the policy. A school board can pursue a breach of contract action against a teacher who resigns mid-year, and it therefore necessarily has the authority to liquidate damages in advance. The policy is a valid liquidated damages clause, not an unenforceable penalty, because the harm caused by a mid-year resignation is difficult to estimate, and 4% of salary is a reasonable forecast of the costs and disruption the district would incur.
Dissenting - Craven, J.
No, the liquidated damages policy is not an enforceable term of the contract. The policy was not mutually agreed upon but was unilaterally imposed by the board after the teacher had already begun performance for the school year. The legislature provided a specific, exclusive remedy for mid-year resignations in the School Code: suspension of the teacher's certificate. A school board lacks the authority to create its own additional penalty. Furthermore, the policy is arbitrary and discriminatory because it imposes the same 4% penalty regardless of whether a teacher resigns at the beginning or near the end of the school year, failing to reasonably relate the damages to the actual harm caused.
Concurring - Green, J.
Yes. I concur with the result and reasoning of the majority opinion.
Analysis:
This decision clarifies that a public employee's employment contract can be modified without a formal signed agreement; acceptance can be inferred from the employee's conduct of continuing to work and accept benefits after being notified of new terms. It affirms the implied power of school boards to use common law contractual remedies, like liquidated damages clauses, to manage their affairs, even when the governing statute provides a different, non-monetary penalty. The case establishes a precedent for upholding reasonable, pre-determined damages for mid-year teacher resignations, strengthening a school district's ability to promote faculty stability and mitigate the financial and educational disruption caused by such departures.
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