Embry v. Hargadine, McKittrick Dry Goods Co.

Missouri Court of Appeals · 1907 · Contracts

Contractsoffer and acceptanceobjective theoryemployment contractobjective assentmeeting of the mindsreasonable personemployment renewal

Facts

Embry had worked for the company under a written one-year contract at $2,000 per year, which expired on December 15, 1903. He testified that on December 23, after previously being put off, he told company president McKittrick that unless he was re-employed for another year he would quit immediately and seek other work, and McKittrick responded, "Go ahead, you're all right; get your men out and don't let that worry you." Embry said he understood this as a renewal on the prior terms and continued working until he was told in February that his services would end March 1. McKittrick denied making a renewal and testified he merely told Embry to return later because he had no time to discuss the matter before the stockholders' meeting.

Issue

Whether an oral employment contract for another year was formed if McKittrick's words would have been understood by a reasonable person as assenting to Embry's demand for renewal, even if McKittrick did not subjectively intend to make a contract. Also, whether the jury instruction improperly required proof that both parties actually intended to contract.

Rule

A contract is judged by the parties' words and acts, not by unexpressed secret intention. If one party's language would be understood by a reasonable person as assenting to the other party's proposed terms, and the other party so understands it, a contract is formed even if the speaker did not subjectively intend to agree.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lena Ortiz managed inventory for Prairie Crest Outfitters in Kansas City under a one-year agreement that had just expired. She told the company president, Aaron Pike, "If you want me to stay for another year on the same pay, I need to know now or I'm leaving today," and he replied, "You're covered—keep the warehouse running and stop worrying about it." Lena stayed and later the company claimed Pike never meant to renew anything.

Under the governing rule, is a contract most likely formed?

Explanation. A contract is judged by outward expressions, not secret intention. If one party's words would be understood by a reasonable person as assenting to the proposed terms, and the other party so understands them, a contract is formed even if the speaker did not subjectively intend to agree. Pike's statement would likely be taken as assent to Lena's proposed one-year renewal on the same pay.