Case: Embry v Hargadine, McKittrick Dry Goods Co.

(1907)

Parties: Plaintiff - (appellant) - Embry

Defendant - (appellee) - Hargadine, McKittrick Dry Goods Co.

Procedural History: Trial court found for defendant, plaintiff appeals. Problem
with jury instructions - to find that both parties intended to make contract.
Found that def did not intent to contract.

Facts: Embry was working for defendant company. His employment contract was
ending Dec 15, 1903. He met with the President on Dec 23, and told him if could
not get a contract renewal for the next year he would quit. President said, "Go
ahead, you're all right; get your men out and don’t let that worry you." A few
months later he was fired, and sued for breach of contract. Trial Court found for
Defendant on the grounds that formation of a contract was dependant on whether the
parties intended (subjective) to enter into one.

Issue: Was the trial court correct in determining that no contract was
breached because there was no subjective intent to contract even though one party
objectively expressed his intent?

Holding: Judgment reversed and remanded. There was a contract because of

objective intent.

Reasoning: there must be a meeting of the minds of both parties for there to be a
contract, and both must agree to the same thing in the same sense. The subjective
intent of the parties (the inner intention) cannot either create a contract nor
stop one from forming. It is the actual words used (the objective intent) that
determines whether a contract was made or not. So, meeting of the minds that is
essential to form a contract is not determined by the secret (subjective) intent
of the parties, but by their expressed (objective) intent. What the President said
may not have been intended to create a contract, but the the actual words he used
"Go ahead, you're all right; get your men out and don’t let that worry you," in
the context of their conversation, would to any reasonable man be understood as a
contract.

RULE: Contract formation is based on objective intent, not subjective intent.

Notes

Intent to contract not necessary - expressed actions form the contract.

Trial court jury - instruction added the element that there has to be an intent to
contract, so we don’t know what the jury believed. What's important is
manifestation; it controls whether a contract was formed or not. Intention is
not relevant.

Defendant in a rush and brushed him off, didn’t intent to contract. But to a
reasonable person, in the context of the conversation, it was a contract, even if
def didn’t intend it.