Quick Summary
Charles R. Embry (plaintiff) was rehired by Hargadine, McKittrick Dry Goods Co. (McKittrick) (defendant), for another year after the expiration of his written contract. However, his employment was terminated before the contract ended.
Embry filed a lawsuit claiming that his termination violated his employment contract. The main issue was whether the conversation between Embry and McKittrick constituted a valid contract.
Facts of the Case
Charles R. Embry (plaintiff) was employed by Hargadine, McKittrick Dry Goods Co. (McKittrick) (defendant), under a written contract that ended on December 15, 1903. Before terminating his contract, Embry sought to discuss his re-employment with McKittrick.
On December 23, 1903, Embry met with McKittrick and expressed his desire to be rehired for another year. According to Embry, McKittrick assured him he could continue working without worry and instructed him to proceed with his work. Embry understood this as an agreement for his re-employment.
However, McKittrick denied these statements and claimed he had asked Embry to wait until after a stockholders’ meeting to discuss the matter further. Approximately two months later, Embry’s employment was terminated.
Procedural Posture and History
- Embry filed a lawsuit against McKittrick, claiming that his termination violated their employment contract.
- The trial court instructed the jury that to find in favor of Embry, they needed to determine not only if the conversation between Embry and McKittrick occurred as Embry remembered but also if both parties intended to enter into a contract for Embry’s continued employment.
- The jury favored McKittrick, ruling that no contract existed between the parties.
- Embry appealed the decision to the St. Louis Court of Appeals.
I.R.A.C. Format
Issue
Whether the conversation between the parties constituted a valid contract, requiring a determination of mutual intention.
Rule of Law
A contract is formed based on the expressed intentions of the parties as indicated by their words and acts rather than their secret intentions.
Reasoning and Analysis
The court of appeals reasoned that even if McKittrick did not intend to rehire Embry when he made the statements according to Embry’s version of the conversation if a reasonable person would have understood those words as an agreement to rehire, then a contract was formed.
McKittrick’s statement of “Go ahead, you’re all right,” can be reasonably interpreted as an assent to Embry’s demand for re-employment.
Therefore, Embry had the right to rely on McKittrick’s statement as an acceptance of his demand and thus formed a valid contract.
Conclusion
The court concluded that if the conversation between Embry and McKittrick happened as Embry testified, and Embry understood it as an agreement to rehire him for another year, then a valid contract existed between them.
The trial court erred in instructing the jury that both parties needed to intend to make a contract for it to be formed. The case was reversed and remanded.
Key Takeaways
- Their expressed words and actions determine the intention of the parties to a contract.
- If a reasonable person would interpret the words used as an agreement to enter into a contract, and the other party understands it, then a valid contract exists.
- The court looks at the objective meaning of the parties’ words, not their undisclosed intentions.
Relevant FAQs of this case
How do courts determine the formation of a contract in such cases?
Courts consider whether the parties’ expressed words and actions reasonably indicate an intent to form a contract.
- For example: If someone offers to sell a car for a specific price, that offer can be seen as a contract formation.
When does a statement qualify as an offer in contract law?
A statement qualifies as an offer if it reasonably appears to express an intent to enter a contract, as understood by a reasonable person.
- For example: Stating, “I’ll sell you my laptop for $500,” typically constitutes an offer in contract law.
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