## Facts

- Charles R. Embry worked for Hargadine, McKittrick Dry Goods Co. under a written one-year employment contract at $2,000 per year, expiring December 15, 1903.
- On December 23, 1903, Embry sought re-employment for another year on the same terms and stated he would quit immediately if no new contract was made.
- Embry testified the company president responded in substance: “Go ahead, you are all right; get your men out and don’t let that worry you.”
- Embry understood the statement as assent to a one-year rehiring and continued working.
- Roughly two months later, the company discharged Embry.
- Embry sued for breach of an alleged one-year oral employment contract; the president denied agreeing to a one-year term and claimed he postponed any contract decision until later.

## Issues

1. Whether contract formation depends on the parties’ undisclosed, subjective intent or on the objective meaning of their words and acts.
2. Whether, if the jury believed Embry’s account of the conversation, the employer’s words constituted a one-year employment contract as a matter of law.
3. Whether the trial court erred by instructing the jury that it could find a contract only if both parties actually intended to contract.

## Decision

- The appellate court reversed the judgment for the employer and remanded for further proceedings.
- The trial court’s instruction improperly required a finding of subjective mutual intent rather than applying an objective standard.
- If the jury found the words were spoken as Embry testified, their legal effect was for the court; in that circumstance, the words created a one-year employment contract.

## Legal Principles

- Mutual assent is determined by outward expressions—words and conduct—as reasonably understood, not by a party’s uncommunicated intention.
- A party may be bound where its statements and actions would cause a reasonable person in the other party’s position to understand that a contract was made, and the other party so understood.
- When the language relied upon is unambiguous, construction of its legal effect is for the court; the jury decides only whether the disputed words were in fact used.
- A jury instruction is erroneous if it makes contract formation turn on a finding that both parties subjectively intended to contract, rather than on the objective meaning of the exchange in context.

## Conclusion

The court held that contract assent is judged objectively and that, if the employer said “Go ahead, you are all right” in response to the employee’s demand for a one-year renewal and threat to quit, those words legally constituted a one-year rehiring, making the subjective-intent-based jury instruction reversible error.


Embry v. Hargadine, McKittrick Dry Goods Co., 127 Mo. App. 383, 105 S.W. 777 (St. Louis Ct. App. 1907)