J. Soc. Cosmetic Chemists, 17, 93-101 (1966) Employment Contracts EUGENE M. BOND* Presented May •, 1965, New York Uity Synopsis The problem of employment contracts is examined from the point of view of legal and moral obligations on the part of employees and employers. Aspects of nondis- closure of trade secrets and of covenants not to work for a competitor after termination of employment are discussed in greater detail. Those who have never been troubled with employment contracts may doubt the need for concern with this subject. Recent develop- ments in this field of law have been rapidly taking place as a result of increased litigation, and today, no one can be sure that he will not, sooner or later, be confronted with the problem. As a result of this in- creased litigation, the law dealing with employment contracts has been transposed from a dormant issue to one very active and turbulent. Some of the recent revival of interest in employment contracts and concern for the resulting legal consequences may be attributed to various articles on the subject in popular technical (1) and trade publications (2). Management and technical personnel are now more aware of some of the delicate problems which may arise out of employment con- tracts. However, caution must be urged in the prevalent practice of advancing simple answers to involved questions, especially to ques- tions dealing with personalities and emotions, by simply applying gen- eral rules of law to particular factual situations. Therefore, although reference may be made to specific court cases to establish certain points of law, it must be realized at the outset that these cases are not the last word on the law, as a great many exceptions to the established rules are known to exist. * Member of the Bar of Virginia and the District of Columbia, 516 Federal Bar Building, Washington, D. C.

JOURNAL OF THE SOCIETY OF COSMETIC CHEMISTS The first question to be considered in any general analysis of employ- ment contracts is: What constitutes an employment contract? Gen- erally, it is well known that any agreement between at least two parties, upon sufficient consideration in which the minds of the parties meet and concur, establishes a contract. When the agreement prescribes an employer-employee relationship, an employment contract is established. Employment contracts require no particular form and, surprising to many individuals, the related legal obligations may take effect even in the absence of a formal contract or other written expression of con- fidence (3). If legal obligations may take effect in the absence of any formal contract, why do we have employment contracts, and are they necessary? Every employee, unless exempted by his employer, has a definite legal and certainly a moral obligation to preserve and protect all information concerning the business affairs or technical disclosures of the employer. Since it is recognized that no formal expression is neces- sary to establish an employment contract, we may next consider what purpose is to be derived from the use of formal contracts. First of all, it may be recognized that formal employment contracts are used primarily to enlarge the legal obligations of the employee to the employer. The employer further benefits by issuance of an actual notice in writing of the obligations to be expected of the employee. With the increasing mobility of personnel into and out of competing organizations and of the movement of employees specializing in highly limited and extremely sensitive areas, it is necessary for a business organization to safeguard itself against loss of confidential information and to avoid also creating an embarrassing situation relative to com- petitive organizations. The precipitated effect of a disclosure of confidential information to a competitor upon the image of an adverse employee may be readily ap- preciated. Seldom, however, is it appreciated until after the fall that even the image of the employer may be damaged in a sincere attempt to prevent dissemination of confidential information by legal recourse against an adverse employee. Should the employer receive sufficient publicity for his efforts, it is likely that even the recruiting of new em- ployees may become more difficult. After all, what employee wants to be "married to the company" after reading a press report that a "multi- million dollar corporation filed suit against a former employee ?" Cer- tainly, the damage of adverse publicity is an important factor which must be considered by both the employee and by the employer before transgressing the involved rights and duties of employment contracts,