## Facts

- Diversified Foam Products (Essco Geometrics, Inc.) supplied foam for Harvard’s office chairs for decades and commonly dealt with Harvard through its purchasing manager.
- After a management change, Harvard adopted an internal policy requiring presidential initials and approvals for purchases, but it did not communicate the policy to suppliers and evidence showed approvals were routinely granted.
- Michael Gray, Harvard’s purchasing manager, concluded Diversified offered superior quality and lower prices than Harvard’s other foam supplier.
- Gray orally agreed that Diversified would receive all of Harvard’s foam business for commercial contracts for two years.
- Diversified’s president sent a letter describing the arrangement; Gray signed it, and Gray then issued purchase orders under which Diversified delivered foam and Harvard paid.
- When Harvard’s president learned of the arrangement, he placed a hold on Gray’s purchase orders and Harvard shifted business back to the other supplier.
- Diversified sued for breach of a written contract (the signed letter plus purchase orders) and breach of the oral agreement; a jury awarded $400,000 on the written-contract claim, and the district court granted summary judgment against the oral-contract claim under Missouri’s UCC statute of frauds.

## Issues

1. Whether sufficient evidence supported a finding that Gray had implied actual authority or apparent authority to bind Harvard to a two-year exclusive requirements-type foam supply agreement.
2. Whether it was error to submit both actual-authority and apparent-authority theories to the jury.
3. Whether the district court erred by refusing Harvard’s requested instruction that an agent’s own statements cannot establish the agent’s authority.
4. Whether the written agreement was too indefinite to be enforceable under Missouri law and the UCC.
5. Whether deposition testimony by Harvard’s former sales manager acknowledging the oral agreement qualified as an “admission” removing the oral contract from the UCC statute of frauds.

## Decision

- The Eighth Circuit affirmed the $400,000 judgment for Diversified on the written-contract claim.
- The court held the evidence was sufficient for a reasonable jury to find Gray had implied actual authority to enter the foam-supply agreement.
- The court also held the evidence independently supported a finding of apparent authority because Harvard placed Gray in a position reasonably signaling authority to suppliers and failed to disclose internal limits.
- The court found no error in submitting both authority theories to the jury.
- The court upheld refusal of Harvard’s requested instruction because the instructions given adequately conveyed that authority must derive from the principal and the proposed instruction was misleading as framed.
- The court held the written agreement was not void for indefiniteness when read with the parties’ course of dealing, trade context, and subsequent performance.
- The court affirmed summary judgment against the oral-contract claim because the statute-of-frauds admission exception required an admission by the party to be charged, not deposition testimony from a former employee.

## Legal Principles

- Under Missouri law, actual authority may be express or implied; implied authority includes powers reasonably necessary to carry out authority the principal has conferred, including through the principal’s knowing acquiescence in the agent’s conduct.
- Apparent authority depends on the principal’s manifestations to the third party; a principal may create apparent authority by placing an agent in a position that reasonably indicates authority and by failing to communicate internal restrictions.
- Missouri law permits submission of both actual and apparent authority theories when evidence supports each.
- A trial court may refuse a proposed instruction that could mislead the jury, so long as the instructions as a whole correctly state the law of agency and authority.
- Contract definiteness is satisfied if the agreement, interpreted with course of dealing, usage of trade, and performance, provides a reasonably certain basis for determining breach and remedy.
- Under UCC § 2-201(3)(b) (as adopted in Missouri), the statute-of-frauds “admission” exception requires an admission by the party against whom enforcement is sought (e.g., in pleadings or testimony in court); testimony from a former employee is insufficient.

## Conclusion

The court affirmed enforcement of the written foam-supply agreement because the purchasing manager could reasonably be found to have both implied actual authority and apparent authority, and the written terms were sufficiently definite when viewed in context; it also affirmed dismissal of the claimed oral agreement because the asserted admission did not satisfy the UCC statute-of-frauds admission exception.


Essco Geometrics, Inc. v. Harvard Indus., Inc., 46 F.3d 718 (8th Cir. 1995)