the other party in what he is to do. A contract to build a house where the builder merely agrees to construct a house according to certain plans to be furnished by an architect and to the satisfaction of the person for whom he is building it, is not a contract of employment. But where a man agrees to do the manual work of building the house under another's orders as to how it shall be done, he is that other man's employee.

The essential element of the relation of employer and employee is the right of the employer to give orders to and direct the employee in the performance of his work.

Most of the work on public buildings, roads, canals, etc., is done by letting the entire contract to a contractor who in turn lets out parts of it to subcontractors. The question of the liability of the main contractor to the employees of his subcontractors rests on this principle. If the employees are taking orders from his foremen, the chief contractor is liable to them as he would be to his own employees (see § 271). If the subcontractors are to do their own directing and give the orders to their own men, being responsible to the main contractor only for the finished results of the work, then he is not liable to their workmen any more than he would be to outsiders.

§ 260. Independent Contractors

Independent contractors are not employees. An independent contractor is a man who engages with another to hand over to him in completed form some particular piece of work, and to receive a certain sum of money for doing it. In building, the excavating, the mason work, the plumbing, and the painting are usually undertaken by such independent con

tractors.

Where a contractor merely engages to do a piece of work for another and retains the right to direct its doing himself through his own foremen, his employees do not ordinarily stand in the relation of employees to the person with whom he

has contracted. Sometimes, however, the law says they shall have the rights of employees, and then they may claim them. Most of the state enactments as to employers' liability and workmen's compensation give employees of independent contractors the same rights against the principal contractor that his own workmen have.

§ 261. Interpretation of Contract

The contract of employment is to be interpreted in the light of what both parties reasonably understood it to mean. The same rules that apply to contracts in general govern this type of contract. (See § 49.) In case the provisions are indefinite, the question as to when it will be understood to begin and to end is answered in §§ 265, 266.

Any well-recognized customs in the particular trade or business to which the contract under consideration relates, such as a custom of paying a certain percentage as commission to insurance agents, etc., will be considered in seeking to find the meaning of the contract.

§ 262. An Express Contract Cannot Be Proved by Custom In attempting to prove an express contract of employment, it is not enough to show the usual custom of a mercantile house or other business in making such contracts. The house is entitled to make a separate contract with every employee; the duties and rights of each employee are regulated by that contract without regard to dealings with other employees.

For instance, in an Alabama case, an employee claimed that there was a custom in the firm to engage employees by the year, and that therefore his employment with them was for the year. The court said that he must prove the actual agreement between himself and the firm.2

2 Hartsell v. Masterman, 132 Ala. 275; 31 So. 616.

Sometimes provisions may be read into a contract from customs which are universally known in the line of business in which the contract of employment was made. For instance, if there was a universal custom to pay employees by the week, the court might find from the testimony that both parties had it in mind at the time of the making of the contract. In order to prove this to be the fact, however, the custom must be so universal that everybody in the business ought to know of it, and either party may prove that they expressly agreed otherwise.

Note:

I.

In making a contract, it is not safe to rely on custom. All provisions of the contract should be stated expressly.

§ 263. Wages

Wages are payable by the day, the week, or the month where the contract expressly provides that they shall be, or where it is the custom to pay in that way, so that the parties might be supposed to have intended to make it part of their agreement. If there were no such custom and the contract said nothing about it, the employee would not be entitled to his wages until the end of the entire period for which the contract

was to run.

The custom of paying wages at short periods, by the week or month for example, is pretty well established. If the parties desire to arrange otherwise, it should be so stated in the con

tract.

§ 264. Modification of Contract

The contract of employment, like every other contract, may be altered by the consent of all the parties to it. The question of whether there must be consideration or not, or what con

stitutes consideration for the new contract, has already been taken up under the subject of contracts in general. (See § 44.)

§ 265. When Contract Begins

Where the contract does not state when it is to begin, it begins at once, or as soon as is reasonable under the circumstances. For instance, if a man is employed to act as bookkeeper for a business which has not yet been started, he will not be expected to begin his work or draw his salary until the business starts.

Note:

I. Both parties should see that the time when the employment is to begin is made part of the contract.

§ 266. Termination of Contract

Where there is no definite time fixed for the contract to end, it will end when either party desires to terminate it. If a definite time is fixed for the payment of wages, such as a day, a week, or a month, the contract will last for at least that period of time, and cannot be terminated before. If the employment is by the week, month, or year, it cannot be terminated by either party except at the termination of such a period. If the employer discharges the employee (except for good cause) before the end of such a period, he will be liable for the employee's wages until the end of the period.

If the employee leaves in the period, he will, strictly, forfeit all claim for compensation. Some courts allow in such cases whatever value the employee can show for his services, less any damage caused by his leaving before his time was up. Notes:

1. A definite understanding as to the duration of the employment is better for both employer and em

2.

ployee. It will avoid unpleasant disputes and may save a lawsuit. Both employer and employee should act fairly about terminating the employment. To leave without notice at end of period or to discharge without notice at end of period is in most cases unfair.

§ 267. Termination of Contract by Breach

A contract of employment may end either when it is completed, or when it is broken by either of the parties to it.

What the Employee May Do. On the part of the employee, the contract may be broken either by leaving the employment or by doing something which would justify his employer in discharging him—by acts of disobedience or insubordination, or by acting contrary to his employer's interests.

The disobedience or insubordination must be such as will prevent the employer from being able to rely on the employee to do good work. And the employee is under no obligation to obey an order to do anything not called for by his contract. A department store owner discharged the head of his dressmaking department because she refused to obey his orders to perform the work of a seamstress. The court held the discharge a breach of contract.

Either incompetence or habitual drunkenness constitutes a breach of the contract. The employee undertakes to be only reasonably competent, however, and he cannot be discharged for not being an expert, unless there is some express understanding calling for a specified degree of skill.

An illness of the employee which keeps him from work also puts an end to the contract, though it may hardly be regarded as a breach.

What the Employer May Do. The employer may break the contract either by discharging the employee without justification, or by rendering the work in some way unsafe to his