Reneging: A Topic to Promote Engaging Discussions About Law and Ethics in a Business Law or Legal Environment Course

Reneging: A Topic to PromoteEngaging Discussions About Lawand Ethics in a Business Law orLegal Environment CourseTonia Hap Murphyn

I. INTRODUCTION

A 2006 study of 10,000 young adults revealed that 44 percent agreed or

strongly agreed that ‘‘If I accepted one job offer and a better one came

along, I would have no problems in telling the first company that I

changed my mind.’’ Only 32 percent disagreed or strongly disagreed.1

Disturbing? Chao and Gardner, the authors of the study, observed, ‘‘Many

older adults interpreted this finding as a negative reflection on the

younger generation, commenting that reneging on a job acceptance

showed lack of character or ethics.’’2 Chao and Gardner attribute this

generational difference to cultural trends and cite corporate scandals and

r 2009, Copyright the AuthorJournal compilation r Academy of Legal Studies in Business 2009

325

Journal of Legal Studies EducationVolume 26, Issue 2, 325–355, Summer/Fall 2009

nAssociate Professional Specialist, Mendoza College of Business, University of Notre Dame. Ithank Sandra C. Vera-Munoz, William D. Nichols, and Mary K. Hamann of Notre Dame,Marianne M. Jennings of Arizona State University, and my husband, attorney Patrick D.Murphy, for their insightful comments and suggestions. I also acknowledge my research as-sistant, Caroline Murphy.

1Georgia T. Chao & Philip D. Gardner, Today’s Young Adults: Surfing for the Right Job (2006),http://media.monster.com/a/i/intelligence/pdf/TRAK/Campus_YoungAdultsFINAL4-16.pdf.The study ‘‘profile[s] young adults . . . [and] their attitudes toward work and general life,’’ inlight of a trend toward moving from job to job, ‘‘much as these young people would surf onthe Internet.’’ Id. at 3. The study defined ‘‘young adults’’ as those aged eighteen to twenty-eight years. It compared responses from young adults to responses of a group of ‘‘olderadults,’’ aged twenty-nine to sixty-one. Id.

2Id. at 9.

http://media.monster.com/a/i/intelligence/pdf/TRAK/Campus_YoungAdultsFINAL4-16.pdf






lack of corporate loyalty as factors that may contribute to a lack of loyalty

in young adults.3 Others observing positive attitudes toward reneging

have also suggested a connection to instances where employers have

reneged.4

When instances of reneging become public, they receive considerable

attention and often provoke disapproval. For example, in the summer of

2007, basketball coach Billy Donovan signed a five-year, $27.5 million

contract with the National Basketball Association’s Orlando Magic, only to

renege a few days later, deciding to remain at the University of Florida.

Among the many media reports, the Associated Press noted, ‘‘[E]ven

though Donovan is back at Florida, his rash decision to bolt to the NBA

may come with consequences. Donovan may have to convince future re-

cruits he won’t forsake them again. The same can hold true for his current

players and assistant coaches.’’5 Sports Illustrated reported that Donovan

3Id. at 3.

4See, e.g., Marilyn Moats Kennedy, Hiree, Hiree, Beware: New Hiring Trends, PHYSICIAN

EXECUTIVE, May–June 1997, at 58–59. Kennedy quotes a ‘‘young lab technician’’ who said,‘‘My only responsibility is to myself, to cut the best deal I can. If I get a better offer closer tograduation, I’m going to take it. Do you think the clinic wouldn’t rescind its offer if it foundsomeone better who’d work for the same amount of money? Please!’’ Kennedy observes thatreneging is not restricted to those newly out of college and may include established physicians.Kennedy quotes an unnamed recruiter who stated, ‘‘The hotter the candidate, the more likelyhe/she will renege. . . . They aren’t even remotely worried about a black eye in the industry.They know they’re good and can work anywhere.’’ Id. at 58. See also Nikki Scott, Reneging: TheHot Economy’s Dirty Secret, http://www.vault.com/nr/newsmain. jsp?nr_page 5 3&ch_id 5 421&article_id 5 19572&cat_id 5 81 (quoting a Georgetown MBA graduate who said, ‘‘When Istarted school I thought reneging was unprofessional and unethical. . . . However, after seeingsome of my friends have their offers rescinded or get laid off, I changed my mind.’’).

5Antonio Gonzalez, Donovan Apologizes to Magic and Florida (June 8, 2007), http://abcnews.go.com/Sports/wireStory?id=3255909. The online edition of Sports Illustrated quotedunnamed sources who stated, ‘‘What [Donovan] did was not taken lightly around the league.. . . It was publicly embarrassing, and for the Magic, it was personal. . . . There are a lot of GMs[general managers] that would be hesitant to offer him a job.’’ Luke Winn, Donovan, MagicClosing in on Agreement to Kill Deal (June 6, 2007), http://sportsillustrated.cnn.com/2007/basketball/nba/06/06/donovan.magic/index.html. Donovan and the Magic subsequently en-tered a termination agreement that included an agreement that Donovan would not coach inthe NBA for five years. Id. A day later, the Magic hired Stan Van Gundy as the new head coach.Reuters, Van Gundy Named Magic Coach as Donovan Returns to Florida (June 8, 2007), http://www.reuters.com/articleID=USN0643393920070608.

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was the third high-level basketball coach to renege in the prior twelve

months.6

Reneging also gains attention at colleges and universities in career

services or placement offices. The National Association of Colleges and

Employers (NACE), the premier organization for career services profes-

sionals, tracks reneging rates and includes those figures in its annual ‘‘Job

Outlook Update.’’7 Nearly all college and university career placement Web

sites counsel students against reneging.8 A typical Web site advises, ‘‘Do not

renege after accepting an offer, except in cases of extreme personal emer-

gency.’’9 Others word it more strongly and unequivocally: ‘‘Accepting a job

offer is a professional commitment. . . . Reneging on an offer is a serious

violation of the Career Center’s policy and will result in immediate sus-

pension of all recruiting privileges.’’10 Many institutions threaten disci-

plinary action.11 Indeed, several leading schools, including the Kellogg

School of Management at Northwestern University, the Wharton School of

the University of Pennsylvania, and Columbia Business School, have re-

6Luke Winn, Donovan Is Latest Coach to Have a Change of Heart (June 4, 2007), http://sportsillustrated.cnn com/2007/writers/luke_winn/06/04/inside.bkc.

7NACE, JOB OUTLOOK SPRING UPDATE 2007 (2007). The NACE periodically polls employers,asking whether the rate of reneging has increased, decreased, or remained the same. Thoserates have fluctuated from year to year. The last time the NACE asked the question, in 2007,employers reported that the rate of reneging remained steady compared with the prior year.Id. The NACE does not supply figures on the number of reneging incidents. During thecurrent economic difficulties, while many sectors of the economy have contracted, a NACEsurvey conducted in the fall of 2008 indicates that ‘‘government, high-tech manufacturing,and professional services firms [are] still projecting some increase [in hiring].’’ NACE, Eco-nomic Trends and the Implications for College Recruiting, available at http://www.naceweb.org/NACETrends08 (last visited Feb. 26, 2009). The NACE survey shows that majors most indemand include accounting, engineering, and computer sciences. Id. One would expect thatreneging, both by employers and applicants, will continue to be an issue.

8I conducted a review of over fifty college career services Web sites.

9E.g., University of Arizona Career Services, http://www.career.arizona.edu/employers/?principals (last visited Feb. 26, 2009).

10E.g., Emory University Career Center, http://career.emory.edu/students/policies.html (lastvisited Feb. 26, 2009).

11E.g., Harvard Business School, http://www.hbs.edu/recruiting/pdf/Student_Recruiting_Policies%202008 (last visited Feb. 26, 2009).

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served the option of assessing monetary fines of up to $1,000 against stu-

dents who renege.12

When a top University of Notre Dame student reneged, Dean Car-

olyn Woo of Notre Dame’s Mendoza College of Business reflected on the

ethical questions presented. Woo wrote,

It’s easy to say that reneging on a job offer is wrong. It’s more difficult to knowwhat we might do under similar circumstances. Every day, all of us face situ-ations that cause us to rationalize our actions or incrementally blur the linebetween right and wrong. Such rationalizations create a slippery slope that, inextreme cases, can lead to the kinds of corporate misconduct we have seen inrecent years. . . . While it’s sobering to contemplate the actions of the bigoffenders, I am even more troubled by all the smaller instances of moral con-flict, like my student’s decision to renege on her job. It is within these smallerarenas that most of us operate every day. As educators, one of our primarygoals should be to help students understand how they might react when pre-sented with an ethical conflict, no matter how big or how small.13

This article is intended for business law and legal environment in-

structors who share that goal. The article discusses not only the compelling

ethical issues that may arise in reneging cases, but also legal issues. The

article provides materials on reneging that instructors may use to help

students understand the roles of law and ethics, and also to teach students

12Caroline Strzalka, Reneging on Offers Can Result in $1000 Fine, WHARTON J. (Oct. 27, 2003),available at http://media.www.whartonjournal.com/media/storage/paper201/news/2003/10/27/News/Reneging.On.Offers.Can.Result.In.1000.Fine-539259.shtml. The article notes that‘‘these new ‘teeth’ to the policy came about when [Wharton] Career Management learnedof over fifteen student reneges last year regarding summer and full-time positions.’’ Id. Theprimary purpose of Wharton’s policy is not punishment, but rather to ‘‘minimize the negativerepercussions to . . . [students’] individual reputations as well as the relationship between theschool and the employer.’’ E-mail from Michelle Antonio, Director, MBA Career Manage-ment, Wharton School of the University of Pennsylvania (July 19, 2008, 3:16 p.m. EDT).Antonio confirms that fines have been assessed, but she declined to disclose the number ofreneges, the number of student fines, or the amount of those fines, due to confidentialityconcerns. She states, ‘‘What we have seen is a higher number of students come in to our officeto discuss their potential desire to renege and in some cases we have been able to work out adifferent situation that eliminates the need to renege, and in others we haven’t, but by thatstandard (getting students to collaborate with us on the decision), I would deem the policy asuccess.’’ Id. The Wharton policy serves as an example of self-regulation, analogous to attor-neys’ professional conduct codes, and may hold promise for other institutions.

13Carolyn Y. Woo, Personally Responsible, BIZED MAG., May/June 2003, at 22, 23.


to spot and give critical thought to ethical issues they may encounter in the

early part of their careers.14 Such personal relevance is likely to make this

an engaging topic for students.

The article begins by reviewing the legal and ethical issues presented

in reneging cases. Next, the article suggests options for presenting reneg-

ing in a legal studies classroom, to enhance coverage of contract law and

employment at will and to prompt critical thought about the ethics of re-

neging. Finally, the article assesses the content of over sixty student papers

on reneging and reports on a statistical analysis of pre- and postcourse

student surveys on the ethics of reneging, which may shed further light on

student attitudes toward the topic and allow some modest conclusions

about the effect of a business law course on student attitudes.

II. THE LEGAL AND ETHICAL ISSUES OF RENEGING

As the term is used in this article, ‘‘reneging’’ occurs when a job offer has

been accepted, and then one of the parties, either the prospective em-

ployer or the prospective employee, backs out before work begins. Re-

neging presents not only issues of contract law and employment at will,

important topics in legal studies courses, but also an opportunity to ex-

amine ethical issues connected with reneging in particular and promise-

keeping in general. This section of the article discusses both the legal and

ethical issues, as background for instructors who wish to incorporate the

reneging issue in their courses.

A. Legality of Reneging

The vast majority of employees in the United States are at will.15 Given the

prevalence of at-will employment and the consequent fact that employ-

ment obtained by graduating seniors is likely to be at will, discussion of the

legality of reneging in this article will focus on at-will employment con-

tracts. Exhibit 1 is a composite ‘‘typical’’ offer letter that a senior accounting

14Regarding appropriate goals of ethics instruction, see infra notes 55–58 and accompanyingtext.

15One source states that approximately 85 percent of employees are at-will. KENNETH W.CLARKSON ET AL., BUSINESS LAW 260 (11th ed. 2009).

2009 / Reneging 329

student might receive.16 Note that it expressly states that the offered em-

ployment is at will.

Exhibit 1: Composite ‘‘Typical’’ Offer Letter

16I obtained offer letter templates from several major firms that recruit and hire large num-bers of students from my institution, including offer letters from all of the Big Four accountingfirms. Exhibit 1 was derived from an examination of those offer letters, and while the major


Courts in many states have examined the issue of whether a prospec-

tive at-will employee has a cause of action when the prospective employer

reneges. Courts have generally found that because at-will employment can

be terminated by either party at any time, even before employment begins,

the prospective employer incurs no legal liability.17 The jilted employee,

therefore, must rely on a promissory estoppel theory in order to pursue a

claim against the reneging employer. Under this equitable theory, however,

in many states, courts have ruled that a prospective employee may not rea-sonably rely on the prospect of employment and therefore cannot recover.18

Courts in other states allow equitable recovery.19

topics covered in these letters and representative language remain, the letter in Exhibit 1 issomewhat simplified.

17See, e.g., Petitte v. DSL Net, Inc., 925 A.2d 457, 461–63 (Conn. App. Ct. 2007); Goff-Hamel v.Obstetricians & Gynecologists, P.C., 588 N.W.2d 798, 801 (Neb. 1999). But cf. Comeaux v.Brown & Williamson Tobacco Co., 915 F.2d 1264, 1270 (9th Cir. 1990) (applying Californialaw and allowing breach of contract action because, under unusual wording of the employ-ment agreement, at-will aspect of relationship did not begin until employment had actuallycommenced). See generally Tracy A. Bateman, Employer’s State-Law Liability for Withdrawing, orSubstantially Altering, Job Offer for Indefinite Period Before Employee Actually Begins Employment,Annotation, 1 A.L.R. 5th 401(1992) (gathering cases from most states); David K. Lucas, Un-reasonably Reasonable Reliance: Prospective At-Will Employment and Promissory Estoppel in Goff-Hamel v. Obstetricians & Gynecologists, P.C., 79 NEB. L. REV. 199 (2000).

18See, e.g., May v. Harris Mgmt. Corp., 928 So. 2d 140, 145–49 (La. Ct. App. 2005). The Maycourt stated,

[I]t is patently unreasonable for an employee to rely on an offer of at-will employment.We acknowledge the apparent harshness of this ruling, which results in an employee whoresigns one job for other at-will employment, does so at her peril. To some degree this isinherent in the concept of at-will employment. Further, to hold otherwise would under-mine the at-will employment doctrine in this state.

Id. at 151. See also Marino v. Oakwood Care Ctr., 774 N.Y.S.2d 562, 563 (N.Y. App. Div. 2004);Slate v. Saxon, Marquoit, Bertoni & Todd, 999 P.2d 1152, 1154–55 (Ore. Ct. App. 2000);Leonardi v. City of Hollywood, 715 So. 2d 1007, 1009–10 (Fla. Ct. App. 1998); Heinritz v.Lawrence Univ., 535 N.W.2d 81, 83–84 (Wis. Ct. App. 1995); Annotation, A.L.R.5th, supranote 17.

19See, e.g., Hernandez v. UPS Supply Chain Solutions, Inc., 496 F. Supp. 2d 778, 783–87 (W.D.Tex. 2007) (noting split in authority in Texas state courts but allowing promissory estoppelclaim under Texas law); Toscano v. Greene Music, 21 Cal. Rptr. 3d 732, 738 (Cal. Ct. App.2004) (reasoning that ‘‘The object of equity is to do right and justice. It does not wait uponprecedent which exactly squares with the facts in controversy, but will assert itself in thosesituations where right and justice will be defeated but for its intervention.’’); Goldstein v.Unilever, No. 397881, 2004 Conn. Super. LEXIS 1126 (Conn. Super. Ct. May 3, 2004) (ob-serving erosion of at-will doctrine by statutes and common law exceptions; holding that claimnot barred as doctrine of good faith and fair dealing applies even to at-will employment, and

2009 / Reneging 331

Even if a court finds that a prospective at-will employee may reason-

ably rely on the promise of employment, proving damages is a second

hurdle. Damages amount to what the employee can prove that he or she

would have earned in the prior jobFnot future lost wages from the pro-

spective job and certainly not placement in the prospective job itself.20

Employers frequently argue in these reneging cases that, if the prior job

was at will, the award of damages for lost income would be speculative and

therefore improper,21 but courts have shown a willingness to award such

relief.22 In addition to lost income, the jilted employee may also be

awarded out-of-pocket expenses, such as expenses associated with the sale

that ‘‘such a rule . . . encourages employers to take such promises seriously.’’); Goff-Hamel, 588N.W.2d at 801–04; Peck v. Imedia, Inc., 679 A.2d 745, 752–53 (N.J. Super. 1996). For a pro-vocative analysis of the causes and possible effects of inconsistent application of at-will em-ployment law from state to state, see Scott A. Moss, Where There’s At-Will, There Are Many Ways:Redressing the Increasing Incoherence of Employment At Will, 67 U. PITT. L. REV. 295, 342 (2005)(‘‘[C]ourts [are] ambivalent about employment at will as manifested by an unwillingness tocomply with the harsh pure form of the doctrine, unwillingness to reject it entirely, and in-ability to find any consistency as to what exceptions to recognize.’’). Moss observes that thesedifferences from state to state ‘‘arise . . . partly from the very nature of common law judicialdecision-making.’’ Id. at 328. He warns that states’ inconsistent application of the employmentat-will doctrine may give an impression of ‘‘doctrinal chaos’’ and arbitrariness, not well-rea-soned judicial analysis. See id. at 303 & 342–43.

20E.g., Toscano, 21 Cal. Rptr. 3d at 738; Goldstein, 2004 Conn. Super. LEXIS 1126.

21To justify the award of damages in contract cases, in general, courts must be able to establishdamages with ‘‘reasonable certainty.’’ Matthew Milikowsky, Note, A Not Intractable Problem:Reasonable Certainty, Tractebel, and the Problem of Damages for Anticipatory Breach of a Long-TermContract in a Thin Market, 108 COLUM. L. REV. 452, 469 (2008) (describing different applicationsof this standard from state to state, noting that ‘‘there is a great deal of judicial sympathy forinnocent parties, and many courts express the belief that such parties should not have re-covery barred because of the possible inexactitude of damage calculation.’’).

22See Toscano, 21 Cal. Rptr. 3d at 738 (stating that ‘‘Our holding necessarily rejects the notionthat the at-will nature of Toscano’s former employment with Fields . . . is a strict impediment torecovery of future wages that Toscano would have earned at Fields had he not relied onGreene’s promise.’’); Goldstein, 2004 Conn. Super. LEXIS 1126 (rejecting defendant’s argu-ment that Goldstein could not prove any damages because her prior employment was at-will,and observing that justice may require a liberal view of damages because the jilted prospectiveemployee, who left her prior job voluntarily, would not be eligible for unemployment com-pensation).


of a house or breaking an apartment lease, and other moving and relo-

cation expenses.23

While there are scores of cases brought by jilted prospective employ-

ees,24 the author’s research uncovered no reported appellate cases

brought by a company against a prospective employee who reneged.25

Although the reasoning applied by courts in the above-cited cases could

apply to a hypothetical case brought by an employer, there are likely prac-

tical reasons that such cases are not filed. Most importantly, as demon-

strated by the Coach Donovan situation described above,26 employers are

generally able to mitigate damages effectively by hiring another candidate

and so may make the business decision to forego a lawsuitFbecause they

have concerns about the lack of precedent or proving any damages with

certainty or simply to avoid bearing the costs and aggravation of litiga-

tion.27 When an employer reneges, however, the prospective employee in

23E.g., Hernandez, 496 F. Supp. 2d at 786.

24Reasons that employers have offered for reneging vary. In Goff-Hamel, the case most oftenincluded in legal studies texts, the defendant doctors famously decided to give Goff-Hamel’sposition to one of their wives. In other cases, the employers cited such issues as financialtroubles or newly discovered concerns about the prospective employee, such as a reevaluationof her qualifications (Goldstein), issues discovered in postoffer reference checks (Petitte), ormerely ‘‘philosophical differences’’ that arose (Peck and May). Not surprisingly, recently somestudents holding offers from Bear Stearns found that their promised jobs had disappeared.See Erin White, Sector Ills Give Some Interns Cold Shoulder (May 6, 2008), http://online.wsj.com/public/article/SB120880533975232099.html (reporting that J.P. Morgan Chase, which ac-quired Bear Stearns, is honoring about 60 percent of Bear’s outstanding offers).

25I conducted online legal research on LEXIS. Cases referencing the above-cited and otherreneging cases, as likely precedents, were reviewed. I also consulted LEX K. LARSON ET AL.,2–10 UNJUST DISMISSAL (2008); E. ALLEN FARNSWORTH, FARNSWORTH ON CONTRACTS (3d ed.2003); and the RESTATEMENT (SECOND) OF CONTRACTS (1979).

26See supra notes 5–6 and accompanying text. Note that as Donovan’s contract was for a defi-nite term, his renege would apparently constitute a breach of contract. This article primarilyconcerns employees who renege on contracts for at-will employment. As such, the legal issuespresented differ. Ethical issues could arise, however, in both situations.

27The fact that there have not been lawsuits brought by jilted employers does not necessarilymean, of course, that there have not been economic costs to these employers. They may, forexample, have incurred additional recruiting costs or been understaffed for a time. Considerwhether there may be implications to employers’ failure to seek a remedy. Milikowsky dis-cusses contract law in terms of economic efficiency, observing, ‘‘Contract damages are meantto give the promisor an incentive to fulfill his promise unless the result would be an inefficientuse of resources. In other words, contract law seeks to encourage efficient breachFbreachwhere resources are moved to a higher value use than the contractual use.’’ Milikowsky, supranote 21, at 458. The system, then, works well (efficiently) when a party contemplating breach

2009 / Reneging 333

fact may have a difficult time finding a new job and may have certain ir-

reversible losses, such as having sold a home to move to the new em-

ployer’s location, and so may be more likely to sue.

B. Ethics of Reneging

Like many business schools,28 the Mendoza College of Business endorses

the integration of ethics into courses across the curriculum.29 Thus, in

addition to the one-credit-hour Introduction to Business Ethics course re-

quired of all sophomores, students address ethical issues in all their busi-

ness courses, including the introductory Business Law course.30

must consider the threat of damages. Milikowsky cautions, however, that ‘‘to the extent thatone party believes that a judge is unlikely to award true expectation damages, it may be en-couraged to breach inefficiently.’’ Id. at 456. Do employers, thus, exacerbate the renegingproblem by failing to take such cases to court, leading prospective employees to believe thatthere is no threat of damages? If employers did pursue such claims, would the courts be assympathetic to jilted employers as they are to jilted employees? Should they be?

28See, e.g., Cindy Blanthorne et al., Accounting Educators’ Opinions about Ethics in the Curriculum,ISSUES ACCT. EDUC. 355, 377 (2007) (providing statistics on integration of ethics into curriculumat 265 business schools, with in excess of 85 percent of schools reporting an integrated ap-proach).

29Fred Mittelstaedt & Joel Urbany, Curriculum Integration Draft Report, Mendoza College ofBusiness (May 7, 2004, rev. Apr. 2005) (unpublished report, on file with author). Many schol-ars have endorsed the integration of ethics. See, e.g., David E. Desplaces et al., The Impact ofBusiness Education on Moral Judgment Competence: An Empirical Study, 74 J. BUS. ETHICS 73, 85(2007) (suggesting that ‘‘promoting the discussion of ethics in business core courses might bean effective strategy for building students’ competence in applying ethics to practical situa-tions.’’); Judith Spain et al., Applying Multiple Pedagogical Methodologies in an Ethics AwarenessWeek: Expectations, Events, Evaluation, and Enhancements, 58 J. BUS. ETHICS 7, 9 (2005); DeborahL. Rhode, Integrity in the Practice of Law: If Integrity Is the Answer, What Is the Question?, 72FORDHAM L.J. 333, 343 (2003). In its Accreditation Standards, the Association to AdvanceCollegiate Schools of Business International (AACSB) lists ‘‘individual ethical behavior’’ as atopic typically to be covered in a management degree program. AACSB, ELIGIBILITY

PROCEDURES AND ACCREDITATION STANDARDS FOR BUSINESS ACCREDITATION, at 71 (2008). TheAACSB also notes that ‘‘[c]ombinations of topics may be grouped to integrate learning.’’ Id. at70.

30The introductory business law course at Notre Dame is a three-credit-hour course requiredof all business majors and generally taken in the sophomore year. The course includes anintroductory unit on the American legal system, with coverage of tort and criminal law, andunits on the law of contracts, sales, and agency. For a comprehensive discussion of ethics cov-erage in the course, see Tonia Hap Murphy, Michael Novak’s Business as a Calling as a Vehiclefor Addressing Ethical and Policy Concerns in a Business Law Course, 25 J. LEGAL STUD. EDUC. 17(2008). As suggested by that title, in addition to the usual readings in a business law textbook,students in the course read Business as a Calling. MICHAEL NOVAK, BUSINESS AS A CALLING: WORK


As has been noted by many commentators, legal studies courses pro-

vide a natural venue for consideration of ethics, as law and ethics are in-

tertwined.31 The approach urged by Paine emphasizes this connection:

[A]ttention to law should be an integral part of any program of ethics educa-tion. But most of all, the approach to teaching ethics and law should set asidethe academic and disciplinary boundaries that divide the fields and focus onthe ultimate objective: preparing students for responsible, fulfilling, and so-cially beneficial careers in business. . . . Attention to law, as an important sourceof managers’ rights and responsibilities, is integral to, but not a substitute for,the ethical point of view.32

Students in a legal studies course, in particular, must understand the

respective, overlapping roles of law and ethics. Paine describes these roles:

There are matters of ethics about which the law has nothing to say. Law, ingeneral, is concerned with conduct which is wrongful, which results in rel-atively serious harm, and which is not an everyday occurrence. The legalsystem does not address trivial matters, especially those that can be rectifiedreadily in other ways and by other authorities. In such cases, we may want to

AND THE EXAMINED LIFE (1996). This 205-page book considers ethical responsibilities of thebusinessperson, largely from an Aristotelian (virtue-based) and Judeo-Christian perspective.Class ethics discussions are tied to the book, and each student writes a five-page paper re-flecting on the book.

31See Thomas W. Dunfee, On the Synergistic, Interdependent Relationship of Business Ethics andLaw, 96 AM. BUS. L.J. 317 (1996) (providing examples of topics commonly covered in legalstudies courses that present opportunities to discuss both legal and ethical requirements, in-cluding the tort of fraud, whistle-blowing, economic duress, and public policy exceptions toemployment at will). Two recent articles describing law/ethics exercises for the business lawclassroom are Marisa Anne Pagnattaro, International Legal and Ethical Considerations at Pfizer,Inc., 22 J. LEGAL STUD. EDUC. 169 (2005), and Darlene Bay & Martha Broderick, Ethical andLegal Implications of White Collar Crime: What Students Need to Know, 18 J. LEGAL STUD. EDUC. 257(2000). Cf. Ellwood F. Oakley, III & Patricia Lynch, Promise-Keeping: A Low Priority in Hierarchyof Workplace Values, 27 J. BUS. ETHICS 377, 379 (2000). These authors cite only ‘‘minimal dis-cussion of law as a component of the students’ ethics framework’’ in the typical business ethicscourse. Id. They note, ‘‘This void is disturbing if one accepts the premise that contemporarylaw in the U.S. strongly reflects the ethical precepts of fairness, honesty, and good faith.’’ Id.See also Sandra L. Christensen, The Role of Law in Models of Ethical Behavior, 77 J. BUS. ETHICS

451 (2008) (reviewing the literature).

32Lynn Sharp Paine, Law, Ethics, and Managerial Judgment, 12 J. LEGAL STUD. EDUC. 153, 154(1994). See also Dunfee, supra note 31, at 322 (noting that ‘‘In order to overcome criticisms thatbusiness ethics research is irrelevant and impractical, it must accurately incorporate relatedlegal doctrines. Further, business ethicists can learn a great deal from the extensive experienceof the law.’’).

2009 / Reneging 335

say that certain behavior is ‘‘ethically or morally wrong,’’ but not ‘‘legallywrong.’’33

Paine observes, however, that ‘‘a wrong that is trivial from the perspective of

the legal system may be extremely serious from the perspective of the in-

dividuals involved.’’34 She also notes, ‘‘The sanctions of public opinion and

the marketplace can, in fact, be much more costly than the damages and

fines imposed by the legal system.’’35 Reneging, as noted in Section II.A.

above, may not be legally actionable36 but still presents ethical issues. These

may be cases where, in fact, harm has been suffered by the jilted party37

even if the harm is not legally recognizable. Whether the reneging party

suffers any sort of social censure or other negative effects is often unclear.38

The fundamental ethical question in reneging cases concerns ethical

obligations that arise when one makes a promise. Traditionally, ‘‘promise-

keeping’’ is regarded as one of the ‘‘core ethical values’’ of business and a

universal moral value.39 Carter distills ‘‘the essence of promising’’ as fol-

lows: ‘‘When a person makes a promise, he stretches himself out into cir-

cumstances that no one can control and controls at least one thing: he will

be there no matter what the circumstances turn out to be.’’40 Carter also

observes, ‘‘It shows weakness of character to run away from hardships.’’41

33Paine, supra note 32, at 157. Paine offers as an example a dinner guest who fails to show up,resulting in aggravation and wasted food for the host. See also STEPHEN L. CARTER, INTEGRITY, at193–204 (1996) (asking ‘‘Can Integrity Be Legislated?’’).

34Paine, supra note 32, at 158.

35Id. at 166.

36All cases concern reneging by employers. In many states, the jilted employee has no re-course at all. In other states, he or she may obtain equitable relief. See supra notes 17–23.

37And perhaps by others, such as those applicants who were rejected. There may be systemiceffects as well: reneging contributes to a lack of trust, which is a negative effect for society at large.

38Consider, however, the comments surrounding the Coach Donovan situation, supra note 5.Will fans boycott Florida Gators basketball? Should they? Will Donovan in fact at some futurepoint have a hard time finding a job?

39Oakley & Lynch, supra note 31, at 377; CARTER, supra note 33, at 130–33 (discussing living upto promises as important to integrity). Carter discusses promise-keeping primarily in the con-text of the marital promise, but the discussion is enlightening for other types of promises as well.

40CARTER, supra note 33, at 130 (quoting Lewis B. Smedes, The Power of Promises, in THOMAS G.LONG & CORNELIUS PLANTINGA, JR., A CHORUS OF WITNESSES: MODEL SERMONS FOR TODAY’SPREACHER, at 156 (1994)).

41Id. at 132.


The presumption then is that the reneging party has an ethical obligation

to ‘‘stick it out,’’ to honor the employment promise.

Carter notes, however, that ‘‘in morality, the reason for an act mat-

ters.’’42 Thus, when a party breaks a promise, it would be appropriate to

assess the reason for doing so. Carter suggests three situations where it

may be morally acceptable to disregard a commitment: impossibility, loss of

meaning,43 and alternate superseding obligation.44 It is interesting to ob-

serve the extent to which these reasons parallel legal excuses to perfor-

mance of a contract. With regard to reneging, it is appropriate, then, to

consider the reasons that the reneging party offers to justify its actions.45

Some proffered reasons would appear to pass ethical musterFfor exam-

ple, the company reneged because it has been liquidated in bankruptcy, or

the prospective employee reneged in order to be close to a parent who was

just diagnosed with a serious disease. Other reasons may be judged in-

sufficient, especially when the relevant circumstances could have been

considered before the offer was given or accepted.

At its most basic, the central ethical issue in reneging cases is whether a

person with integrity would renege. Rhode provides a useful definition of

‘‘integrity’’: ‘‘willingness to adhere to values that reflect some reasoned de-

liberation, based on logical assessment of relevant evidence and competing

views.’’46 Stating the issue in this way inherently accepts the proposition

42Id. at 133.

43A situation where the ‘‘commitment seems to have ‘lost its point.’’’ Id. at 136.

44This refers to a situation where competing moral principles exist. Id. Such would be the case,for example, when one had accepted a job far from home, and then before the starting date, aparent becomes ill and needs the care of the prospective employee.

45See supra note 24 for a listing of common reasons that employers give for reneging. I havebeen told anecdotally by accounting firm recruiters and college career services personnel thereasons that students most commonly offer include personal reasons (desire to be near familyand friends or a family crisis that has recently arisen) or concern about company performanceFthe latter being especially prevalent recently among students who have taken jobs in theautomotive or investment banking industry. A career service director who requested ano-nymity stated, ‘‘A little digging indicates that parents are telling their children that . . . [re-neging is acceptable because] these companies wouldn’t hesitate to cut you loose in a corporatelayoff.’’ Interviews with anonymous sources (Fall 2007).

46Rhode, supra note 29, at 335–36. See also CARTER, supra note 33, at 22 (‘‘Thinking mattersthrough before we act is always difficult and often consumes a significant part of our time. Butit is simply not possible to be a person of integrity without doing it.’’).

2009 / Reneging 337

that values education is appropriate and worthwhile.47 In the aftermath of

recent corporate scandals, there has been an increased call for attention to

integrity and virtue.48 This focus on virtue, including the virtue of promise-

keeping, certainly fits with the ethical orientation in Business as a Calling, the

primary ethics reading in the author’s course.49 Such a focus would be

equally appropriate in any legal studies course, as virtue ethics is a stan-

dard school of ethical thought and an approach to ethical reasoning that is

commonly included in the ethics chapter of legal studies textbooks.50

47See Marc Lampe, Increasing Effectiveness in Teaching Ethics to Undergraduate Business Students, 1TEACHING BUS. ETHICS 3, 10 (1996) (reviewing the literature and asserting that ‘‘Values ed-ucation has not been well-utilized in management education, where it has the potential to playan important role in students’ ethical development.’’).

48See, e.g., Kelley Holland, Is It Time to Retrain B-Schools?, N.Y. TIMES, Mar. 15, 2009, at BU1(questioning whether shortcomings in business school education contributed to the currenteconomic crisis, and quoting experts who advocate a new focus on ‘‘character skills’’); Rhode,supra note 29, at 333 (observing that ‘‘Integrity is in fashion, and those of us who worry aboutethics for a living have an unusually attentive audience’’ due to recent corporate scandals). Arecent study by the Aspen Institute suggests that MBA students, at least, recognize the im-portance of integrity. When a sample of MBA students were asked ‘‘How important are thefollowing factors in contributing to the recent corporate scandals in the U.S.?’’ over 70 percentlisted ‘‘the personality/character of the individual involved’’ as ‘‘very important.’’ That was themost highly ranked factor. ASPEN INST., WHERE WILL THEY LEAD? 2003 MBA STUDENT ATTITUDES

ABOUT BUSINESS AND SOCIETY (2003).

49See supra note 30.

50Review of ethics chapters in the legal studies textbooks cited infra note 60. See also ChristinaHoff Sommers, Teaching the Virtues, 111 PUB. INT. 3 (Spring 1993) (criticizing the lack of at-tention in American colleges to private morality and the virtues). Sommers argues that currentethics courses focus too much on social policy, such as debates on capital punishment or DNAresearch, and not enough on private moral behavior. Id. at 3. She opines, ‘‘In a course spe-cifically devoted to dilemmas and hard cases, it is almost impossible not to give the student theimpression that ethics itself has no solid foundation.’’ Id. at 4. Discussing university cheatingscandals, she notes, ‘‘Part of the problem is that so many students come to college dogmaticallycommitted to a moral relativism that offers them no grounds to think that cheating is justwrong.’’ Id. The consequentialist/situational ethics approach may particularly lead to suchconclusions. While the main focus of this article and my course is virtue ethics, it would beappropriate, of course, to examine reneging under multiple ethical theories. One might ask,for example, from the duty ethics perspective, whether it would be desirable if everyone feltfree to renege. Under stakeholder theory, one might consider who may be adversely impactedby reneging. Note, however, that not all ethical theories are necessarily equally valid. See, e.g.,Marianne M. Jennings & Jon Entine, Business With a Soul: A Reexamination of What Counts inBusiness Ethics, 20 HAMLINE J. PUB. L. & POL’Y 1, 52–55 (1998) (criticizing stakeholder theory);Thomas L. Carlson, Ross and Utilitarianism on Promise Keeping and Lying: Self-Evidence and theData of Ethics, 15 PHILOSOPHICAL ISSUES 140 (2005) (discussing various ethical theories as ap-plied to promise-keeping). See infra notes 68–71 and accompanying text regarding the types


Another ethical inquiry related to reneging concerns the ethics of the

employment at-will doctrine itself. Dissatisfaction with this doctrine ap-

pears to be an underlying theme in some of the appellate court decisions

on employers reneging, with some courts apparently eager to temper the

doctrine’s sometimes harsh effects.51 Critics of employment at will assert

that the doctrine does not give employees adequate security and protection

from capricious employers.52 They argue that it is unfair and unethical to

discharge employees without just cause and that employees should have a

higher level of legal protection and job security.53 While courts and stu-

dents may criticize the employment at-will doctrine because it provides no

legal recourse when an employer reneges,54 the question here would be

whether they would similarly criticize the doctrine if it permits the em-

ployee to renege with no liability. If not, why not?

III. OPPORTUNITIES TO INCORPORATE RENEGING INA BUSINESS LAW OR LEGAL ENVIRONMENT COURSE

The academic literature provides useful guidance for designing classroom

exercises and methods to enhance student learning. In designing exercises

of ethical reasoning applied by students in papers on reneging. Presumably, the person withintegrity would take the effects on others into account.

51See, e.g., Goldstein v. Unilever, No. 397881, 2004 Conn. Super. LEXIS 1126 (Conn. Super.Ct. May 3, 2004) (observing ‘‘the substantial erosion of the employment at will doctrine’’ andfurther eroding it by holding that recovery under a promissory estoppel theory may be ap-propriate).

52See, e.g., James S. Bowman & Jonathan P. West, Lord Acton and Employment Doctrines: AbsolutePower and the Spread of At-Will Employment, 74 J. BUS. ETHICS 119 (2007) (assessing doctrinefrom three ethical perspectives: consequentialism, duty ethics, and virtue ethics); Moss, supranote 19; Tara J. Radin & Patricia H. Werhane, Employment-at-Will, Employee Rights, and FutureDirections for Employment, 13 BUS. ETHICS Q. 113 (2003); Mark V. Roehling, The Employment At-Will Doctrine: Second Level Ethical Issues and Analysis, 47 J. BUS. ETHICS 115 (2003); Michael J.Phillips, Toward a Middle Way in the Polarized Debate Over Employment At Will, 30 AM. BUS. L.J. 441(1992).

53While students may have little problem framing arguments against employment at will,there are, of course, arguments that the doctrine actually benefits both the employer and theemployee. For a comprehensive discussion, see articles cited supra note 52.

54See supra note 17. As explained in text accompanying notes 18–23, equitable relief may beavailable in many, but not all, states. The availability of equitable relief in those states tempersthe effects of the legal doctrine.

2009 / Reneging 339

for the classroom, instructors first are well advised to keep in mind learn-

ing objectives. Three appropriate objectives related to incorporating the

reneging issue in a legal studies course would be (1) to encourage students

to recognize the legal and ethical issues inherent in reneging decisions, (2)

to encourage students to reach a reasoned conclusion as to whether re-

neging may be ethically justified in a particular case, and (3) to encourage

students to act with integrity.55

Of course, it is also preferable that classroom exercises engage the

students’ interest. That is more likely to happen if students see the relevance

of the classroom exercise to their own lives. Noting that ethics instruction

often focuses on decisions faced by executives, Lampe explains, ‘‘It will be a

long time, if ever, before undergraduates face such decisions. This type of

issue may be more appropriate for an executive MBA class than for under-

graduate business students.’’56 Lampe encourages the study of common

personal and professional problems in ethics courses. He also urges study of

real-life questions rather than adopting an overly philosophical approach.57

In summary, well-designed classroom exercises will ‘‘provide an in-

teresting case study that the student can relate to which will stimulate de-

bate not only on the issues of ethics and social responsibility but also how

these issues related to particular majors/courses of study.’’58 Such a goal

also appropriately reflects the spirit of integration, underscoring the rel-

evance of multiple disciplines. The hope is that ‘‘[o]nce the student be-

comes engaged with the problem of what kind of person to be, and how to

become that kind of person, the problems of ethics become concrete and

55Regarding appropriate goals of ethics instruction, see Paul R. Murphy & John R. Boatright,Assessing the Effectiveness of Instruction in Business Ethics: A Longitudinal Analysis, 69 J. EDUC. BUS.326, 326 (1994) (reviewing literature and describing as appropriate goals ‘‘to help studentsbecome more alert in discovering the moral issues that arise in their own lives’’ and ‘‘to teachstudents to reason carefully about ethical issues’’); Andrea Giampetro-Meyer & TimothyBrown, In Search of a Happy Ending, 7 TEACHING BUS. ETHICS 303, 310 (2003) (noting that ‘‘Byengaging in reflection, students learn to articulate ethical issues, and in articulating these is-sues, to get a clear sense of the complexity of the issues they face,’’ and adopting the goal of‘‘test[ing] their ability to act on principles of right and wrong’’).

56Lampe, supra note 47, at 5. My students are primarily sophomores, which affects appro-priate delivery of the course material. See Joseph Solberg et al., Living (Not Learning) Ethics, 14J. BUS. ETHICS 71, 73 (1995) (surveying literature and discussing moral reasoning abilities andattitudes of sophomores, and noting the problem of ‘‘self-centered reasoning’’).

57Lampe, supra note 47, at 5. Accord Blanthorne et al., supra note 28, at 377.

58Spain et al., supra note 29, at 9.


practical and, for many a student, moral development is thereafter looked

on as a natural and even inescapable undertaking.’’59

Reneging, considered in the context of contract law and/or employ-

ment at will, can serve as such an interesting, relevant case, likely to

prompt vigorous discussion. Instructors wishing to address reneging in a

business law or legal environment course may consider incorporating one

or more of the following approaches.60

Instructors may choose to provide to students the composite ‘‘typi-

cal’’ offer letter in Exhibit 1 at the beginning of the study of contract law, as

an example that would be used for the duration of that unit. Initially, the

letter would be used in class to illustrate legal issues that may arise with

regard to a typical express, bilateral contract. Instructors would ask such

questions as the following: At what point would the contract be formed?

What if the student signs the offer letter but it is lost in the mail? What

consideration supports the resultant contract? As employment is contin-

gent on the student’s graduation and a background check, the letter also

illustrates a condition precedent. Later in the contracts unit, the instructor

would introduce the reneging question, challenging students to address

the legal and ethical issues presented. Finally, the instructor could raise the

practical question of what a student who regrets acceptance of a job offer

might do. In legal terms, it may be desirable for the student to try to ne-

gotiate a mutual rescission of the contract. In fact, depending on the reason

for the renege, employers may be quite willing to release the student from

obligations. The practical point, of course, is that there are ways to handle

these cases in a professional manner and other ways that are more likely to

lead to hard feelings and resentment. The foregoing treatment of reneging

issues in class would be appropriate for students of all levels.

59Sommers, supra note 50, at 6.

60A review of the latest editions of prominent business law and legal environment textbooksreveals that seven of the twelve books examined introduce the issue of employers reneging.CLARKSON ET AL., supra note 15, at 260–61 (briefly covering topic in Contemporary Legal De-bates box); JEFFREY F. BEATTY & SUSAN S. SAMUELSON, BUSINESS LAW AND THE LEGAL ENVIRONMENT

401–02 (4th ed. 2007) (excerpting Toscano); JANE P. MALLOR ET AL., BUSINESS LAW 235–36 (12thed. 2004) (excerpting Goff-Hamel); A. JAMES BARNES ET AL., LAW FOR BUSINESS 179 (10th ed.2009) (including Goff-Hamel as chapter-end problem); JOHN D. ASHCROFT & JANET E. ASHCROFT,LAW FOR BUSINESS 324 (16th ed. 2008) (including Goff-Hamel as chapter-end problem); NANCY

KUBASEK ET AL., DYNAMIC BUSINESS LAW 386 (2009) (providing example in chapter discussionmodeled on these cases); TONY MCADAMS, LAW, BUSINESS, AND SOCIETY 483 (8th ed. 2007)(providing example in chapter discussion modeled on these cases).

2009 / Reneging 341

Another option for introducing these topics in class discussion would

be to have students read one or more of the appellate court cases on re-

neging in connection with either promissory estoppel in the contracts unit

or the study of employment at will. An interesting approach would be to

have the students read one case allowing equitable recovery and another

finding that the prospective employee could not reasonably rely on the

promise of a job and, therefore, could not recover any damages, such as

Goldstein v. Unilever61 and May v. Harris Management Co.62 The instructor

may choose to draw one of these cases from the local jurisdiction.63 In-

structors adopting this approach could explore not only the legal and eth-

ical issues raised by reneging, but also the nature of the common law.

Students would be asked to analyze and evaluate the reasoning of the

courts. Instructors then might ask the question that is the central focus of

this article: would students’ thinking on reneging change if it is the pro-

spective employee, and not the company, who reneges? This approach

may be more challenging, especially for younger students.

The composite ‘‘typical’’ offer letter could also serve as the focus of a

set of exam questions. The exam would include, first, the expected ques-

tions of contract law, as suggested above. The instructor would then ask

students to consider the reneging issues in an essay question. Successful

answers would evidence critical thinking about the legal and ethical issues.

This exercise would be challenging for students, especially if the instructor

had not focused on these issues in class.

In the author’s course during the 2007–08 academic year, an ethics-

related paper assignment was directed at the reneging issue.64 The re-

neging-related topic was one of three available to students each of the two

semesters. Sixty-two students chose to write on the reneging issue.65 The

61Goldstein v. Unilever, No. 397881, 2004 Conn. Super. LEXIS 1126 (Conn. Super. Ct. May 3,2004).

62May v. Harris Mgmt. Co., 928 So. 2d 140 (La. Ct. App. 2005).

63Such cases may be found in the Annotation, supra note 17.

64See supra note 30 for information about my course. A detailed description of this ethics-related paper assignment is contained in the cited article.

65Thus, 29.8 percent of the students chose the reneging topics. In the fall semester 2007, viaan anonymous survey, I queried students as to how they selected a paper topic. Of those whoelected not to write on the reneging issue, eighteen students said that ‘‘other topics were moreinteresting.’’ Fifteen said that ‘‘other topics were easier.’’ Two said that ‘‘other topics weremore applicable to their life experiences.’’ Fourteen did not choose a response. Of those


design of the questions was influenced by the ‘‘Giving Voice to Values’’

initiative developed by the Aspen Institute Business and Society Program

and the Yale University School of Management.66 The reneging questions

posed for the written assignment were as follows:

Fall 2007:

Professors at Michigan State University recently released results of a studyentitled ‘‘Today’s Young Adults: Surfing for the Right Job.’’ (cite omitted). Thestudy showed that 44% of young adults agreed or strongly agreed that ‘‘If Iaccepted one job offer and a better one came along, I would have no problemsin telling the first company that I changed my mind and would take the betteroffer.’’ Such a move is commonly called ‘‘reneging.’’ Is someone who renegesin breach of contract? Explain. Is reneging morally wrong? Discuss the mostpersuasive arguments that reneging is wrong, as well as those arguments thatsupport the idea that reneging is not morally objectionable, with reference toMichael Novak’s Business as a Calling.67

writing on the reneging topic, four said that they chose the topic because ‘‘it was familiar.’’Fourteen said that it was ‘‘relevant to their lives.’’ Fourteen said that it was the most ‘‘inter-esting.’’ Two did not respond. Student survey (October 18, 2007) (on file with author).

66This model curriculum is described at the Aspen Web site. See Aspen Institute, Giving Voice toValues, http://www.aspencbe.org/teaching/gw/index.html. As noted there, the focus of the cur-riculum is to ‘‘help people build and practice the understanding and skills they need to rec-ognize, speak and act on their values when these conflicts arise’’ and to give ‘‘opportunities toconstruct and practice responses to frequently heard reasons and rationales for not acting onone’s values.’’ Id. A basic method is to present a particular business situation, asking studentsto consider the arguments for and against certain behavior, and to determine, ‘‘How would aperson with integrity act in this situation?’’ This approach, in my judgment, is appealing be-cause it allows students to take a detached, reasoned look at the situation. Students who areasked, ‘‘What would you do?’’ may feel pushed to determine ‘‘What does the professor wantme to say? What is the right answer?’’ The ‘‘Giving Voice to Values’’ approach removes thepersonal pressure and requires a full and reasoned, perhaps less cynical response. See alsoSolberg, supra note 56. Solberg states:

If it is true that typical college students frequently reject previously established commu-nity standards, then merely reinforcing these standards in the classroom is precisely thewrong emphasis of ethical instruction. . . . Perhaps a better pedagogical technique is totake advantage of this rebellious and temporary period of development by providing analternative forum for personal ethical introspection and development. It is indeed aperfect time and a perfect place to ask the student rebelling against community standardsof conduct, ‘‘If not this, what do you suggest?’’

Id. at 73.

67Instructors adopting this topic would substitute a reference to the ethics reading that is apart of the course.

2009 / Reneging 343

Spring 2008:

Assume that on November 1, Chris, a Notre Dame senior, accepted a job offerfor two years’ employment with an accounting firm, set to begin upon Chris’graduation in May. In February, Chris informs the accounting firm that he hasaccepted a different job offer and will not be joining the firm. Such a move iscommonly called ‘‘reneging.’’ By reneging, is Chris in breach of contract? Ex-plain. Is reneging morally wrong? Do your answers depend upon the reasonsthat Chris has reneged (e.g., to make more money, to be closer to family andfriends, or because of concerns about the financial stability of the first firm)? Ifso, explain. Discuss the most persuasive arguments that reneging is wrong, aswell as those arguments that support the idea that reneging is not morallyobjectionable, with reference to Michael Novak’s Business as a Calling.

The following section of the article describes the content of these student

papers, as well as student responses on a survey on reneging and provides

some insights into the thinking of these students about reneging.

IV. A CLOSER LOOK AT STUDENT THINKING ONRENEGING

An important goal in the author’s business law course was to encourage

students to recognize ethical issues and come to reasoned conclusions

about them. To assess the progress of students in those areas, the author

analyzed two indicators of student thinking: first, student papers on re-

neging, and second, student responses on pre- and post-course surveys on

reneging.

A. Analysis of Content of Student Papers

In the fall 2007 semester, forty-four students completed papers on the re-

neging topic. Of these, seven students concluded that reneging is ethical.

Fourteen students concluded that reneging is unethical. The remaining

twenty-three students concluded that reneging may be ethical or unethical,

depending upon the reason for the decision. The following discussion

provides an overview of common conclusions and reasoning.

Of the seven students concluding that reneging is ethical, six dis-

cussed recognized schools of ethical thought, with five of those students

discussing two or three different theories. Four raised the issue of integrity

or virtue ethics. Two referenced duty ethics. Two students discussed the

issue in light of consequentialism. Four discussed harm to other parties or

stakeholder theory. Four students wrote primarily about self-interest or


self-fulfillment as justification for reneging. Five of the seven students

offered as support for their conclusions the fact that companies sometimes

renege.68 Most of the seven students who concluded that reneging is eth-

ical found the latter two reasons to be very compelling. Their reliance on

the rationalization that ‘‘everyone is doing it’’ or ‘‘fighting fire with fire’’ is,

of course, spurious ethical reasoning.69

The fourteen students who concluded that reneging is unethical sim-

ilarly put their discussion in the context of several schools of ethical

thought. These students in general heavily emphasized the concept of in-

tegrity and the importance of promise-keeping and loyalty. Twelve of the

fourteen devoted a large part of the discussion to that point. Four of these

students discussed the rationalization that ‘‘everyone is doing it,’’ but re-

jected that as a weak moral argument.

The majority of those writing on the reneging topic in the fall 2007

semester reached a more nuanced conclusion. These twenty-three stu-

dents concluded that reneging is sometimes ethical.70 Many of these stu-

dent cited competing ethical obligations, especially newly arising family

obligations. Many of these students wrote of the need to think carefully

before accepting a job offer, noting that once the offer has been accepted,

only previously unforeseeable situations would justify reneging.71 Several

observed that there could be a number of stakeholders hereFnot just the

68One student wrote, ‘‘The main flaw in arguments against reneging is that they are too naı̈ve.That’s the nature of business: seeking the optimal agreement for yourself. . . . Reneging . . . [is]an accepted practice in the business world.’’ Student paper (on file with author).

69See Lampe, supra note 47, at 14. See also Robert A. Prentice, Ethical Decision-Making: MoreNeeded than Good Intentions, 63 FIN. ANALYSTS J. 17, 17 (2007) (noting that ‘‘Even well-inten-tioned people can stumble into ethical minefields if they do not keep their ethical antennae upand guard against errors in judgment that are commonly madeFerrors that, indeed, peopleare often predisposed to make.’’). Prentice discusses the prevalence of the spurious ‘‘everyoneis doing it’’ defense, id. at 19, and the justification that ‘‘other people make mistakes becausethey are bad people whereas we make mistakes because we are trapped in a difficult situa-tion.’’ Id. at 17.

70One student wrote, ‘‘It is unfair to claim that every form of reneging is unethical, though amajority of cases do fit this category.’’ Student paper (on file with author). This statementcould fairly characterize the position taken by most of the twenty-three papers in this group.While most of these papers discussed criteria for when reneging would be justified, as ex-plained in the main text, several of these papers adopted the ‘‘it depends’’ conclusion withoutever specifying the criteria for judgment.

71See supra text accompanying notes 42–45. This is, by and large, a valid point, and indicatessome level of critical thought about the ethical issues here.

2009 / Reneging 345

prospective employee and the company, but also other applicants who may

have been rejected. Several students also noted that whether reneging is

ethical depends upon whether the company could easily mitigate and in

fact would not be harmed.

A different reneging-related topic was offered in the spring of 2008.

It set out a specific scenario, involving ‘‘Chris,’’ who reneges on a two-year

employment contract. The renege in this case, therefore, would be legallyactionable because the employment is for a fixed term. The fact that Chris

had breached a contract affected the students’ ethical analysis. Not sur-

prisingly, no students concluded that Chris had acted ethically. Eleven

students concluded that his actions were unethical. Seven students con-

cluded that Chris’s actions may have been ethical, depending on the cir-

cumstances. Again, most of these students cited family circumstances as

potentially compelling. Their ethical reasoning was similar to that offered

by students in the fall 2007 semester. In the author’s judgment, in general,

the papers from the spring semester included a more complete and

thoughtful discussion of the ethical issues. The likely reason is that stu-

dents were more engaged by the scenario, which clearly cast this as an

ethical dilemma they may face personally in the near future.

B. Methodology of Spring 2008 Reaction Questionnaires and Analysis of StudentResponses

In the spring of 2008, to gain a better understanding of students’ thinking

about reneging, the author administered pre- and postcourse surveys on

the ethics of reneging. The author did not set out to test any particular

hypothesis on what students’ attitudes would be. Rather, the aim was to

learn more about students’ perspectives, to inform presentation of the is-

sue in the author’s course, and also to add to the literature on promise-

keeping.72

The precourse survey was administered on the first day of the busi-

ness law course, prior to any coverage of course material. The topic of

reneging on employment contracts was not directly addressed in class lec-

ture or discussion during the semester. The course employs the Clarkson

textbook,73 which raises the issue of employers reneging, but that issue was

72See studies cited infra note 91.

73See supra note 15.


not discussed in class. As noted above, some students chose to write their

ethics paper for the course on the topic of reneging, and so had the op-

portunity to examine that issue closely during the semester. The post-

course survey, which included the same questions, was administered on the

final day of class.

The anonymous assessment instruments included a cover sheet, with

instructions and a consent form, and a questionnaire comprising sixteen

questions. Six of those questions gathered demographic information, and

ten measured student reactions to the reneging issue. One-hundred-four

students were registered for the course. Of those, eighty-nine students at-

tended on both the first and the last day and chose to participate in the

survey.74 The study, therefore, compares the mean responses of these

eighty-nine respondents, collected at the beginning (precourse) and end

(postcourse) of the semester.

Table 1: Descriptive Statistics of DemographicsFSpring 2008

Year of StudySophomores 71 79.8%Juniors 12 13.5%Seniors 6 6.7%

Age18–19 years 31 34.8%20–21 years 52 58.4%22–24 years 6 6.7%

MajorBusiness 83 93.3%Arts and Letters 4 4.5%Engineering 2 2.2%

Have Been Through Formal Job Interview ProcessYes 61 68.5%No 28 31.5%

Have Paid Work ExperienceYes 88 98.9%No 1 1.1%

Have RenegedYes 5 5.6%No 84 94.4%

74Three students declined to participate. The remaining students either added the courseafter the first class, dropped it during the term, or simply missed the last class.

2009 / Reneging 347

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cou

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n5

28

Stu

den

tsw

ho

hav

ein

-te

rvie

wed

–P

ost

cou

rse

n5

61

So

ph

.–P

ost

-co

urs

en

57

1

Sr.

–Po

st-

cou

rse

n5

6

1.

Ih

ave

ren

eged

on

ajo

bo

ffer

.1

.46

(0.9

4)

1.4

6(0

.84

)1

.49

(0.8

8)

1.3

1(0

.60

)1

.50

(0.9

2)

1.4

4(0

.81

)1

.55nnn

(0.9

1)

1.0

0nnn

(0.0

0)

2.

Ith

ink

ren

egin

gis

eth

ical

lyac

cep

t-ab

le.

2.9

4nnn

(0.9

4)

2.6

3nnn

(0.8

2)

2.6

2(0

.85

)2

.69

(0.7

0)

2.5

2(0

.85

)2

.67

(0.8

1)

2.7

6nn

(0.8

4)

2.0

0nn

(0.6

3)

3.

Ass

um

eth

atC

hri

sh

asac

cep

ted

ajo

bo

ffer

.C

hri

sre

-n

eges

and

acce

pts

ajo

bw

ith

ad

iffe

ren

tfi

rm,

ino

rder

tob

ein

ad

iffe

ren

tci

ty,

clo

ser

tofa

mily

and

frie

nd

s.C

hri

sh

asb

ehav

edet

hic

ally

.

3.4

3nnn

(1.0

1)

3.0

1nnn

(1.0

4)

3.0

8(1

.06

)2

.69

(0.8

7)

3.1

4(1

.04

)2

.95

(1.0

4)

3.1

8nnn

(1.0

3)

2.1

7nnn

(0.4

1)

4.A

ssu

me

that

Kel

lyh

asac

cep

ted

ajo

bo

ffer

.K

elly

ren

eges

and

acce

pts

ajo

bw

ith

ad

iffe

ren

tfi

rm,

bec

ause

the

oth

erfi

rmh

aso

f-fe

red

ala

rger

sala

ry.

Kel

lyh

asb

ehav

edet

hic

ally

.

2.8

9nnn

(1.0

3)

2.3

3nnn

(0.9

0)

2.4

1nn

(0.9

1)

1.9

4nn

(0.7

7)

2.3

2(0

.77

)2

.33

(0.9

6)

2.4

5(0

.92

)2

.00

(0.6

3)


Tab

le2

.(C

on

td.)

All

Pre

cou

rse

n5

89

All

Po

stco

urs

en

589

Stu

den

tsw

riti

ng

on

oth

erto

pic

–P

ost

cou

rse

n5

73

Stu

den

tsw

riti

ng

re-

neg

ing

pap

er–P

ost

cou

rse

n5

16

Stu

den

tsw

ho

hav

en

ot

inte

rvie

wed

–P

ost

cou

rse

n5

28

Stu

den

tsw

ho

hav

ein

-te

rvie

wed

–P

ost

cou

rse

n5

61

So

ph

.–P

ost

-co

urs

en

57

1

Sr.

–Po

st-

cou

rse

n5

6

5.

Ass

um

eth

atP

ath

asac

cep

ted

ajo

bo

ffer

.P

atre

neg

esan

dac

cep

tsa

job

wit

ha

dif

fere

nt

firm

,b

ecau

seP

ath

asco

nce

rns

that

the

firs

tfi

rmis

hav

-in

gfi

nan

cial

dif

fi-

cult

ies.

Pat

has

beh

aved

eth

ical

ly.

3.3

3nnn

(0.9

4)

3.1

0nnn

(0.9

7)

3.1

1(0

.98

)3

.06

(0.9

3)

3.0

7(0

.86

)3

.11

(1.0

2)

3.2

0(0

.97

)2

.67

(1.0

3)

6.

Wh

eth

erre

neg

-in

gis

eth

ical

lyac

-ce

pta

ble

or

no

td

epen

ds

up

on

ho

wm

uch

tim

eh

asp

asse

daf

ter

the

ori

gin

alo

ffer

was

acce

pte

d.

2.7

4(1

.06

)2

.85

(1.1

4)

2.7

9(1

.14

)3

.13

(1.1

5)

3.2

1nn

(0.9

9)

2.6

9nn

(1.1

8)

2.9

4nn

(1.1

6)

1.8

3nn

(0.7

5)

2009 / Reneging 349

Tab

le2

.(C

on

td.)

All

Pre

cou

rse

n5

89

All

Po

stco

urs

en

58

9

Stu

den

tsw

riti

ng

on

oth

erto

pic

–P

ost

cou

rse

n5

73

Stu

den

tsw

riti

ng

re-

neg

ing

pap

er–P

ost

cou

rse

n5

16

Stu

den

tsw

ho

hav

en

ot

inte

rvie

wed

–P

ost

cou

rse

n5

28

Stu

den

tsw

ho

hav

ein

-te

rvie

wed

–P

ost

cou

rse

n5

61

So

ph

.–P

ost

-co

urs

en

57

1

Sr.

–Po

st-

cou

rse

n5

6

7.

Wh

eth

erre

neg

-in

gis

eth

ical

lyac

-ce

pta

ble

or

no

td

epen

ds

up

on

wh

eth

erth

ere

was

aw

ritten

emp

loym

ent

con

trac

t.

3.5

5nnn

(1.1

8)

2.9

4nnn

(1.1

7)

3.0

0(1

.14

)2

.69

(1.3

0)

3.0

4(1

.29

)2

.90

(1.1

2)

3.0

4nnn

(1.2

0)

2.1

7nnn

(0.4

1)

8.

Bef

ore

tod

ay,

Ih

adg

iven

tho

ug

ht

toth

ere

neg

ing

is-

sue.

2.4

9nnn

(1.2

4)

3.8

4nnn

(1.0

0)

3.7

3nn

(1.0

4)

4.3

8nn

(0.5

0)

3.5

0(1

.17

)4

.00

(0.8

8)

3.7

7nn

(1.0

2)

4.3

3nn

(0.5

2)

9.

Bef

ore

tod

ay,

Ih

adn

ever

hea

rdo

fre

neg

ing

.

2.2

8nnn

(1.2

8)

1.3

9nnn

(0.6

3)

1.4

2(0

.60

)1

.25

(0.7

7)

1.4

3nn

(0.5

7)

1.3

8nn

(0.6

6)

1.4

2(0

.67

)1

.33

(0.5

2)

10

.M

ost

com

pan

ies

are

gen

eral

lylo

yal

toth

eir

emp

loye

es.

3.3

7nnn

(0.7

9)

3.6

7nnn

(0.6

7)

3.6

6(0

.67

)3

.75

(0.6

8)

3.7

1(0

.66

)3

.66

(0.6

8)

3.6

4(0

.68

)3

.50

(0.5

5)

(sta

nd

ard

dev

iati

on

s)npo

0.1

01

5st

ron

gly

dis

agre

ennpo

0.0

53

5n

eith

erag

ree

no

rd

isag

ree

nnnpo

0.0

15

5st

ron

gly

agre

e


Table 1 reports the demographics of the respondents. Table 2 con-

tains the questions from the Reaction Questionnaire as well as mean

responses for all respondents and for various demographic groups.75

The first two columns allow comparison of responses on the pre- and

postcourse surveys. The data suggest the following notable observations:

� Five of the eighty-nine students admitted to reneging.76

� On the postcourse survey, 18.0 percent of the respondents agreed that

‘‘reneging is ethically acceptable,’’77 reduced from 29.2 percent of re-

spondents who indicated that they agreed or strongly agreed with that

statement on the pre-course survey.78

� Results of a paired sample statistical analysis suggest development in

students’ thought during the semester. There were highly significant

changes (po0.01) in mean responses for all respondents from the pre-

course to the postcourse survey for all but one of the nine questions

gauging student attitudes toward reneging.79 For example, on the broad

question asking whether students agree that ‘‘reneging is ethically ac-

ceptable,’’ the mean response on the precourse survey was 2.94

(s.d. 5 0.94).80 The mean response for all respondents on the post-

course survey was 2.63 (s.d. 5 0.82). On the question asking whether

reneging for a larger salary is ethically acceptable, the mean response

pre-course was 2.89 (s.d. 5 1.03). Postcourse, the mean response was

75These means are based on the ordinal scale established in the assessment instrument, with‘‘strongly disagree’’ anchored on 1 and ‘‘strongly agree’’ anchored on 5.

76Survey data (on file with author).

77Id. Postcourse, no respondents ‘‘strongly agreed’’ with this statement. Precourse, five‘‘strongly agreed.’’

78Id. Thus, fewer of my students say they believe reneging is ethically acceptable than in Chaoand Gardner’s survey. See supra note 1 and accompanying text. In making such a comparison,one should keep in mind the age ranges of the respective demographics. In my study, 95percent of respondents were under age twenty-two. See Table 1. The demographic in Chaoand Gardner’s study ranged from age eighteen to twenty-eight years. Studies suggest thatolder respondents may be more inclined to place more importance on promise-keeping. Seeinfra notes 91 and 93.

79Table 2, questions 2–10. The one question for which mean responses did not significantlychange over the course of the semester was question 6, asking whether the ethics of reneging‘‘depends upon how much time has passed after the original offer was accepted.’’

80 The survey employed a five-point scale, with five anchored on ‘‘strongly agree’’ and oneanchored on ‘‘strongly disagree.’’

2009 / Reneging 351

2.33 (s.d. 5 0.90).81 In general, respondents registered much less sym-

pathy with reneging at the end of the course than at the beginning.

These results provide support for the proposition that critical thinking

about the issue did occur.82

� Both pre- and postcourse, in comparison with the mean level of agree-

ment with the unqualified statement that ‘‘reneging is ethically accept-

able,’’ there is a higher level of agreement that reneging may be

acceptable in certain situationsFespecially when the decision is based

on the desire to be near family and friends (precourse mean 5 3.43,

s.d. 5 1.01; postcourse mean 5 3.01, s.d. 5 1.04) or a concern about the

financial status of the prospective employer (precourse mean 5 3.33,

s.d. 5 0.94; postcourse mean 5 3.10, s.d. 5 0.97)).83 Students were least

sympathetic to those who renege to take a higher salary (precourse

mean 5 2.89, s.d. 5 1.03; postcourse mean 5 2.33, s.d. 5 0.90).84 On

both surveys, students were also somewhat likely to find that reneging

is more acceptable if there is no written contract (precourse

mean 5 3.55, s.d. 5 1.18; postcourse mean 5 2.94, s.d. 5 1.17),85 which

is a distinction not made in the law in these cases.

� While some commentators attribute acceptance of reneging by young adults

to reneging by employers,86 respondents in this survey tended to agree that

‘‘most employers are generally loyal to their employees’’ (precourse

mean 5 3.37, s.d. 5 0.70; postcourse mean 5 3.67, s.d. 5 0.67).87 This re-

sult may suggest that there are other justifications for reneging decisions.

This study provides no definitive insights as to what factors may ac-

count for these changes. Notably, the mean responses on the postcourse

survey of students who wrote their ethics papers on the reneging topic

were statistically similar to the mean responses of those who wrote on other

81Table 2, question 4.

82Pearson correlations are generally consistent with the t-test results, showing highly signifi-cant correlations (po.01) for all but questions 8 and 9, for which correlations were significant(po.05). Test results on file with author.

83Table 2, questions 3–7.



86See supra notes 3–4.



topics.88 As stated above, reneging on job contracts was not specifically ad-

dressed in class. The author suggests that students’ thinking in fact was

positively affected by the course material, apart from the ethics papers. Over

eight weeks of the fourteen-week semester were devoted to contract law

issues.89 Students focused during that time on the nature of commitments

and the legal enforceability of promises. When students encountered cases

where a promise would not be legally enforceable, the author routinely

challenged students to consider whether, ethically, it would be right none-

theless to live up to that commitment.90 The highly significant changes in

mean responses to questions about the ethics of reneging, precourse to

postcourse, suggest that the content and methods of this course are fruitful.

This study adds to the literature assessing student attitudes toward

promise-keeping,91 but in assessing conclusions reached, one must con-

88Mean responses for these two demographics did significantly differ (po.05) on question 4,concerning the ethics of reneging for a larger salary. Students who wrote the reneging paperwere significantly less sympathetic to that justification. Table 2. A Pearson correlation is con-sistent with these t-test results, showing only a marginally significant correlation for question 4(Pearson correlation 5 �2.03, p 5 .057). No other correlations were significant. As shown inTable 2, mean responses were also compared for other demographic groupsFthose who hadgone through a formal interviewing process or not, and sophomores versus seniors. Statis-tically significant changes were observed when comparing sophomores and seniors, with se-niors generally less sympathetic to reneging than sophomores. Such results may be consistentwith other studies of changes in ethical attitudes based on age, see infra note 91, but I cautionagainst sweeping conclusions here due to the small number of seniors who participated in thisstudy (a sample of six).

89Including the common law of contracts, sales, and agency.

90For example, when the Statute of Frauds would bar enforcement of an oral contract, orwhen the statute of limitations period had passed, or when a minor might be permitted todisclaim a contract without making restitution. I require students to prepare written answersto study questions for each class, and several of these pose such questions for reflection. Forexample, one study question asked:

Students are often surprised to learn that not every promise is legally enforceable. Wehad an example of such a legally unenforceable promise in the last chapter: an offeror’spromise to hold the offer for some period of time is unenforceable except in specialcircumstances. We see other examples in this chapter: generally promises made withoutconsideration are unenforceable. Do you agree that the law should sometimes not en-force promises? Why or why not?

Exam essay questions also commonly ask for such critical thinking about the ethics of hon-oring a contract even when it is not legally enforceable.

91See, e.g., Chao & Gardner, supra note 1; Oakley & Lynch, supra note 31. Oakley and Lynchtested the value that students place on promise-keeping by examining a sample of 708

2009 / Reneging 353

sider limitations of the study. First, the sample cannot be regarded as rep-

resentative of all university sophomores. For example, the respondents here

were students at a Catholic university and as part of their course require-

ments in the freshman and sophomore year would have taken required

philosophy, theology, and ethics courses.92 Due to this curriculum, one

might expect these students to be more attuned to ethical issues. Results

may differ for a population at a secular institution or an institution that does

not have similar curricular requirements. Second, one cannot generalize

these results for other age groups.93 Ninety-five percent of the respondents

here were under age twenty-two. Finally, there may be a question about

whether student responses were affected by the context of the survey and

student concerns about whether their responses were truly anonymous.94

executive and business students, including students at the graduate and undergraduate levels.About half the respondents were over age thirty. Respondents were asked to make layoffdecisions, with the options of discharging an employee with a two-year employment contractwho had more than a year remaining on that contract, or discharging an at-will employeeinstead. Some of the respondents were informed that it would be illegal to fire the employeewith the two-year contract; others were not so informed. All the hypothetical employees hadsimilarly satisfactory performance. The authors concluded that ‘‘the answer to whether peoplekeep their workplace promises without being forced to do so by implied consequences of legalsanctions is no. Further, for respondents in the present study, promise-keeping in the work-place clearly is not a core value.’’ Id. at 386. The authors also opined, ‘‘More discouraging thanthe finding that people keep their promises only when compelled to do so legally is the fre-quency with which people do not keep their promises even when the threat of legal sanctionsexists, indicating that other values take precedence.’’ Id. at 386–87. Respondents placed moreimportance on such factors as seniority and ‘‘overcoming adversity.’’ The authors examinedthe effects of age, religious beliefs, and supervisory experience and found certain significantdifferences based on age, with older respondents more likely to keep their promises.

92See Notre Dame Core Curriculum, http://nd.edu/�corecrlm.approved/index.htm (lastvisited Feb 26, 2009).

93Both studies on attitudes toward promise-keeping cited supra note 91 showed statisticallysignificant variability of responses based upon the age of the respondents.

94The Instructions and Consent that respondents signed indicated that there were ‘‘no risks toparticipating in this study,’’ and assured respondents that their ‘‘identity and responses [wouldbe] confidential,’’ with reported results of the study not to contain any specific references toparticular respondents.


V. CONCLUSION

When an instance of reneging becomes known, the public is often critical,

seeing reneging as evidence of a lack of integrity. Judging by the results of

the Chao and Gardner study, however, the typical young person may have

‘‘no problems’’ with such an action. This article took a closer look at the

legal and ethical issues of reneging. In many states, when a prospective

employee reneges, the jilted employer would have no recourse in the

courts. But the ethical issue remains: would a person with integrity renege?

Integrity generally requires one to honor promises made, although in

some situations it may be morally acceptable to disregard a commitment,

such as when there are competing moral obligations.

This article explored how the reneging issue may be introduced in a

legal studies course, to complement coverage of contract law and employ-

ment at will, but also to encourage critical thinking about the ethics of re-

neging. Judging by student responses in papers and on the Reaction

Questionnaire, the author’s course did contribute to positive development

of student thinking on this ethical issue. As students generally seemed to

recognize, in the final analysis, it is far too simplistic and generally wrong to

say that reneging poses ‘‘no problems.’’

A broader point of this article was to join those who make a public call

for integrity. It is appropriate and important to tell students that integrity is

expected. If instructors would consistently convey such expectations, per-

haps students would be more likely to think carefully before taking morally

dubious action. Surely that point is an important one.

2009 / Reneging 355

Documents

Reneging: A Topic to Promote Engaging Discussions About Law and Ethics in a Business Law or Legal Environment Course