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Any valid contract, including an employment contract, requires the parties to give each other something in exchange for entering into the agreement. In legal terms, the parties must give each other “consideration” in order for their contract to be enforceable.

The Ontario Court of Appeal recently affirmed this principle as it applies to employment contracts in the case of Hobbs v. TDI Canada Ltd. ([2004] O.J. No. 4876).

Allan Hobbs, an experienced advertising salesperson, left another job to join TDI Canada Ltd. As a salesperson, Hobbs’ earnings were primarily based on his commissions. In their pre-contract discussions, Hobbs and TDI verbally agreed on commission rates and had a common understanding of how commissions were calculated and paid in the industry. Before resigning from his old job, Hobbs insisted on receiving a written offer of employment from TDI. The offer letter Hobbs was provided with did not specify his commission rates, but read: "Details on the rates, calculation and payment of commissions shall be provided to you in a separate document." Hobbs resigned from his old job the same day he signed TDI’s offer letter.

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