## Facts

- American Energy Services (AES) hired several employees in 1996 as at-will employees.
- At a 1997 meeting, employees raised concerns about AES’s viability and working conditions.
- A company vice president allegedly promised that, if AES were sold or merged, the original employees still employed at that time would receive 5% of the value of the sale or merger.
- In 2001, AES was acquired; seven of the original employees remained employed at the time of the transaction.
- The employees demanded the promised payment; AES refused.
- The employees sued for breach of an oral agreement to pay 5% of the sale/merger value to original employees who remained employed through the transaction.

## Issues

1. Whether an employer’s oral promise to pay at-will employees a percentage of future sale/merger proceeds, conditioned on their remaining employed until the transaction, forms an enforceable unilateral contract once the employees perform by staying.

## Decision

- The Supreme Court of Texas reversed the judgment for AES and remanded.
- The court held the alleged promise was enforceable as a unilateral contract upon the employees’ performance in remaining employed until the sale.
- The court rejected the argument that at-will status made the promise unenforceable as illusory once performance occurred.
- The case returned to the trial court for proceedings on the merits, including damages and any remaining defenses.

## Legal Principles

- A promise that appears illusory when made may become binding if it invites performance and the promisee completes the requested act, creating an enforceable unilateral contract.
- In at-will employment, an employer’s contingent compensation promise (conditioned on continued employment until a specified event) can supply consideration through the employee’s continued service until the event.
- Mutuality of obligation is required for bilateral contracts at formation, but unilateral contracts become enforceable upon performance, even if the promisor could have avoided liability before performance by terminating an at-will employee.

## Conclusion

The Texas Supreme Court held that an employer’s contingent promise to share sale proceeds with at-will employees who remain until a sale or merger becomes enforceable as a unilateral contract when the employees perform by staying through the transaction, requiring reversal of summary judgment and remand for further proceedings.


Vanegas v. Am. Energy Servs., 302 S.W.3d 299 (Tex. 2009)