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The Contract

§ 2.02
Key point 2-02. The relationship between a minister and church is contractual in nature. The contract may be expressed in a signed document, or it may be implied. Either way, there are important legal consequences resulting from the contract.

1. GENERAL CONSIDERATIONS

The relationship between a minister and church is based on contract. One court observed that "one becomes pastor of a church pursuant to a contract, made with the person or body having the authority to employ."[40] Walker v. Nicholson, 127 S.E.2d 564, 566 (N.C. 1962). Another court noted that "just as a church can contract with persons outside the church membership, it can contract with its own pastor."[41] Waters v. Hargest, 593 S.W.2d 364, 365 (Tex. 1979). Often, a contract of employment will be implied between a church and its minister if no written agreement was signed. As one court observed, "[t]he absence of a written contract is completely immaterial; the conduct of the parties clearly indicates an agreement to retain [the] pastor until his dismissal by the church."[42] Vincent v. Raglin, 318 N.W.2d 629 (Mich. 1982).

Ascertaining when the contract between a minister and a church is created is important, for once a contract exists each party possesses rights which may be protected by law. If, for example, a church agrees to employ a minister, but reverses its decision before the minister begins his or her duties, has a contract been created? If so, the church may be liable for breach of contract. If not, the minister may be without a legal remedy. Similarly, is a contract created when a church offers a position to a minister who accepts the appointment, but who later repudiates it? If a contract did exist the church may have legal recourse against the minister for the costs incurred in seeking another minister.

Unfortunately, it is often difficult to ascertain whether or when a contract has been created, because a minister rarely signs a formal contract setting forth all of the terms of employment. Even when a minister and church attempt to execute a written agreement they may do so in a manner that is not legally enforceable. In one case, a church entered into the following contract with a prospective minister:

Section 1. Agreement on Salary. The First Party does hereby agree to pay the Second Party One Hundred Seventy Five ($175) Dollars per week. All church engagements are counted as part of salary. This is a starting salary.
Section 2. Engagements. The Second Party cannot accept any outside engagements without first getting the approval of the First Party, even if it is a charitable affair.
Section 3. Length of Contract. This contract shall be a one (1) year contract with the option to terminate, if both parties mutually agree. This contract contains the entire agreement between the parties and supersedes any and all other agreements, verbal or written, and the first party shall not be bound by any agreement or representation other than those contained herein.

The church repudiated the agreement before the minister began his duties, and the minister sued the church for breach of contract. The court concluded that

in a contract for the performance of services by one party in consideration of the payment of money by the other party, the nature and character of the services to be performed as well as the place of performance and the amount to be paid must be certain and definite. The contract here contains no description of the nature and character of the services to be performed by the minister or when or where the duties are to be performed. It is so indefinite and vague that it is unenforceable.[43] McTerry v. Free For All Missionary Baptist Church, 200 S.E.2d 915, 916 (Ga. 1973).

On the other hand, if the church's offer is in writing, and sets forth (1) the services to be performed, (2) compensation to be paid, and (3) the term of employment (which may be indefinite), an enforceable contract ordinarily will be created on the day the minister signs the agreement or submits an acceptance to the church. This assumes, of course, that the church had authority to make the offer and acted in conformity with its governing documents.[44] Most courts hold that acceptances are valid when deposited in the mail, assuming that the mail is an authorized means of acceptance. A minority of courts insist that actual delivery of the acceptance is necessary before a contract can be created. See generally Morrison v. Thoelke, 155 So.2d 889 (Fla. 1963); Reserve Insurance Co. v. Duckett, 238 A.2d 536 (Md. 1968); 1 A. CORBIN, CONTRACTS &sec; 78 (1950 & Supp. 2008). On that date, all of the requirements for a valid and enforceable contract exist—an offer and an acceptance, an exchange of mutually beneficial promises, and a lawful purpose.[45] See generally A. CORBIN, CONTRACTS vols. 1, 1A, and 2 (1950 & Supp. 2008).

2. CLERGY EMPLOYMENT CONTRACT CHECKLIST

What terms should be included in a minister's contract of employment? This will depend on the circumstances of each case. However, ministers and church boards should consider the following elements in structuring a minister's employment contract:

  • Names. Legal names of each party.
  • Signatures of each party. If the church is incorporated, then its president and secretary ordinarily are authorized to sign contracts on behalf of the church (they should be sure to sign in a representative capacity, indicating that they are signing on behalf of the church). If the church is unincorporated, state law will determine who should sign on behalf of the church. In some states, duly elected or appointed trustees may sign contracts on behalf of the church.
  • Characterize the minister as an employee or self-employed. If self-employed, it would be helpful to cite the basis for this conclusion.
  • Job description. Clergy are entitled to know what is expected of them and what is not. Many conflicts between ministers and church boards or congregations are based on differing assumptions as to the minister's responsibilities. These conflicts can be eliminated by a properly drafted job description.
  • Term. State the term of employment and conditions for renewal. In some cases the term will be indefinite.
  • Discipline or dismissal. Grounds for discipline or dismissal should be specified, as should any procedure that must be followed. This often is addressed in the bylaws of either the local church or a denominational agency. If so, it need not be mentioned in an employment contract.

Tip. It is advisable for the contract to state that it incorporates the provisions of the church's bylaws or other governing document.

  • Arbitration. Churches and ministers should consider an arbitration clause committing them to use arbitration rather than the civil courts to resolve disputes.
  • Compensation. Define the compensation of the minister, including any fringe benefits. This is an important feature in any employment contract. A full discussion of this important issue, including salary surveys and several components of a compensation package, is contained in a companion text.[46] See COMPENSATION HANDBOOK FOR CHURCH STAFF (published annually by Christianity Today International).
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