When I first posted on the contract law issues in the Salaita case, I did so primarily as a contract law scholar and concerned member of the faculty. The contract law issues seemed fair game—especially as they related to my own work in contract law and theory. It was also important to let the world get a sense of the diversity of viewpoints that any great institution, like the University of Illinois, has. I was not hoping to get deeply involved in all the surrounding controversies.
Still, many people have recently asked me about the contract law issues in Chancellor Wise’s case. As is by now well known, the Board of Trustees recently voted not to approve a resignation agreement tendered by Wise, which contained a retention payout of $400,000. Rather than answer these questions piecemeal, I thought I’d offer some brief public reflections. In cases like this, it is especially important to emphasize that I speak for no one but myself. I speak just as any law professor might, when looking at these issues from the outside and with no special insider knowledge.
From the documents I have seen in news outlets, I currently believe that:
- Chancellor Wise entered into a valid and fully formed contract with the University of Illinois in 2011. That contract included two non-tenured, salaried, administrative appointments (viz., as Vice President and Chancellor) and four tenured, non-salaried positions in various departments. These appointments were subject to approval of the Board and colleges, but all those approvals came through.
- As part of her original contract, Wise was promised a retention incentive package of $500,000 conditional upon her completing her full five years in these administrative positions. In addition, she was entitled to a pro-rated amount (roughly $400,000 as of her resignation) if she were to leave “sooner at the election of the Board of Trustees”.
- This contractual obligation cannot be avoided simply because Governor Rauner or others believe it is a good policy decision to reduce administrative costs going forward.
- There are, on the other hand, two circumstances in which the University of Illinois would not be contractually obligated to pay the $400,000. First, there would be no obligation if Chancellor Wise left her position on her own volition (i.e., as opposed to “at the election of the Board of Trustees”). Whether she did so appears to be in dispute. Second, the University of Illinois could justify its non-performance of the remaining terms of Wise’s original contract if Wise engaged in a prior total breach of the contract. Not knowing enough facts, I do not yet have a fully formed opinion on this topic. It is nevertheless safe to say that any grounds that the Board believes are grounds for dismissal would be among those cited to justify non-performance. (To be more specific, these would likely include any grounds relating to the intentional evasion of FOIA requirements that may have recently surfaced.)
- If there is no contractual obligation to Wise, then policy decisions like those voiced by Governor Rauner concerning the appropriate use of state funds are fair game from a contractual perspective. The University would, in other words, have discretion whether to give Wise the $400,000. It would therefore be appropriate for the Board of Trustees to consider this question from many different angles and try to determine what is in the best interests of the University going forward. It would also be appropriate for the Board to consider Wise's contributions to the University holistically, rather than focusing on one or two events.
- Finally, some people have asked me whether the recently negotiated resignation agreement between the University of Illinois and Wise is in the same class as Stephen Salaita’s agreement, given that both were executed but subject to Board of Trustee approval. This is an important question because, even if Wise's original agreement had no incentive retention obligations, this more recent agreement—which was never approved—promised her $400,000. Still, unlike both her original contract and Salaita’s contract, this new agreement says: “[w]hen executed by both parties, this Revised Agreement will constitute a binding agreement amending the Initial Agreement . . . subject only to its subsequent approval by the Board or the Board Executive Committee” (emphases added). This language suggests a fairly clear intention to create a condition on formation, not performance. I therefore believe that this recent settlement agreement was not fully formed, and that most of the contract law issues in this case will depend on whether Wise was due $400,000 under her original contract.
I have tried to stay focused here on purely factual or legal questions that may be of interest to people following these events—given the questions I have been receiving. I am consciously repressing both my philosophical side and my personal views on what the best way to proceed would have been.