Cook v. Coldwell Banker/Frank Laiben Realty Co.

Missouri Court of Appeals

967 S.W.2d 654 (1998)

Rule of Law
A unilateral contract is enforceable when a promisee has engaged in substantial performance under the contract.

Facts
Cook (plaintiff) worked for Coldwell Banker/Frank Laiben Realty Co. (Coldwell Banker) (defendant) as a real estate
agent. In March 1991, Coldwell Banker announced a bonus program. The program provided three levels of
compensation based upon commissions earned for the year. Agents earning over $25,000 in commissions would
receive the largest bonuses, which would be paid at the end of the year. In September, Coldwell Banker announced that
the bonuses would be paid at a banquet in March 1992, and that, in order to receive a bonus, the agent would need to
remain with the company until then. Cook had already surpassed $32,000 in commissions by the time the
announcement was made. At the end of the year, Cook was entitled to a bonus of over $17,000. In January 1992,
Cook accepted a position with another company. Coldwell Banker informed her that she would not receive her bonus
for 1991. Cook filed suit. The trial court entered judgment in her favor. Coldwell Banker moved for a directed verdict,
arguing that Cook (1) had not established consideration for the offer of a bonus and (2) had not accepted the offer. The
motion for a directed verdict was denied. Coldwell Banker appealed to the Missouri Court of Appeals.

Issue
Is a unilateral contract enforceable even though the promisee has not fully performed under the contract?

Holding and Reasoning (Crane, J.)

Yes. A unilateral contract exists when a party makes a promise and the other party performs in reliance on the promise.
Until the other party has performed, the promisors promise is merely an offer to enter into a unilateral contract and,
therefore, unenforceable due to lack of consideration. The promisees performance provides consideration and shows
that the promisee has accepted the offer. The unilateral contract is enforceable to the extent that it has been performed.
Typically, an offer may be revoked at any time prior to performance. However, with a unilateral contract, the offer may
not be revoked if the offeree has rendered substantial performance. In the current matter, Coldwell Bankers promise to
pay a bonus operated as an offer to enter into a unilateral contract. Cook worked for Coldwell Banker through 1991
with the intent to accept the offer. The evidence shows that, as of September 1991, when Coldwell Banker attempted to
modify the offer, Cook had earned over $30,000 in commissions, which is sufficient to entitle her to all three bonus

levels. Cooks performance is sufficient to establish substantial performance under the contract prior to Coldwell Bankers
attempt to modify the offer. Accordingly, the trial court is affirmed in denying Coldwell Bankers motion for a directed
verdict.