## Facts

- Kabil Developments Corporation sought helicopter services to perform a U.S. Forest Service construction project.
- Inland Helicopters, owned by E.W. and Peggy Mignot, acted through its pilot/agent, Van Honeycutt.
- On June 10, Honeycutt discussed equipment, estimated time, and hourly rates with Kabil’s vice president; Kabil used those figures in its Forest Service bid.
- Kabil conceded no contract was formed on June 10.
- After Kabil’s bid was accepted, Kabil’s president and vice president met with Honeycutt on June 25, explained the project schedule, and testified that Honeycutt stated Inland “would do the job.”
- Kabil proceeded on the assumption Inland had committed and later obtained substitute helicopter services at a higher cost when Inland did not perform.
- Kabil sued for breach of contract seeking the price differential; Inland denied contract formation and asserted any agreement was conditioned on Honeycutt’s later site inspection and approval for safe and economically feasible operations, which he claimed failed.

## Issues

1. Whether admitting testimony that Kabil’s vice president “felt” obligated because a contract existed improperly allowed the jury to decide contract formation based on subjective belief rather than objective manifestations of assent.
2. Whether the jury instructions, considered as a whole, correctly required an objective standard for mutual assent or instead suggested subjective intentions could create a contract.
3. Whether the evidence permitted submission to the jury of the question whether an oral contract was formed.

## Decision

- The Oregon Supreme Court affirmed the judgment for Kabil and the jury’s damages award of $4,771.85.
- The court reaffirmed that contract formation is determined by objective manifestations, not uncommunicated mental states.
- The challenged “felt obligated” testimony was properly admitted for the limited purpose of explaining Kabil’s subsequent conduct, not as the legal standard for contract existence.
- The jury instructions, read as a whole, adequately confined the jury to an objective mutual-assent inquiry.
- Sufficient evidence supported submitting contract formation to the jury, including the parties’ discussions of rates and timing, the alleged June 25 commitment (“would do the job”), and Kabil’s reliance; Inland’s alleged condition precedent presented a credibility question for the jury.

## Legal Principles

- Mutual assent is determined by the objective meaning of parties’ words and acts as understood by a reasonable person, not by secret or unexpressed intentions.
- Evidence of a party’s subjective belief may be admissible for limited, non-dispositive purposes (such as explaining subsequent conduct), so long as the factfinder is instructed to apply the objective standard to contract formation.
- Jury instructions are evaluated as a whole; minor imperfections do not require reversal if the charge correctly states the governing objective test and does not mislead the jury.
- Where evidence reasonably supports competing accounts of assent (including alleged conditions precedent), contract formation is a fact question properly left to the jury.

## Conclusion

The court upheld a jury finding of an oral contract because the case turned on objective manifestations of assent, the challenged subjective-belief testimony was limited to explaining conduct, and the instructions adequately directed the jury to apply the objective standard when deciding whether a contract existed.


Kabil Dev. Corp. v. Mignot, 566 P.2d 505 (Or. 1977)