This case involved an alleged oral agreement between Kabil Developments Corporation (Plaintiff) and Inland Helicopters, owned by E.W. and Peggy Mignot (Defendants), under which Defendants were to provide helicopter services. The Defendants did not perform the services, and the Plaintiff was awarded damages at trial.
When the dispute concerns an unwritten agreement, the conclusion that the parties manifested mutual assent must be construed by evidence of their negotiations and other conduct from communications and overt acts, rather than undisclosed intents and ideas. However, in face-to-face negotiations, words are not everything and a fact-finder may well believe that what a party thought he was doing would show in what he did.
At trial, the Defendants denied that there was ever a contract, and objected to testimony by the Vice-President of the Plaintiff’s company, Mr. Munroe. Mr. Munroe was asked to testify whether he felt obligated to give the helicopter work to Defendants, and the court allowed him to testify as to whether or not he felt bound by the contract.
Defendants contended that allowing this testimony permitted the jury to assume that Mr. Munroe’s “unexpressed convictions” had probative bearing on the fundamental issue of whether or not a contract was formed.
Did the trial court’s rulings on certain testimony and instructions permit the jury to erroneously find a contract based on subjective intentions and expectations rather than on objective manifestations of mutual assent?
As this case involved face-to-face negotiations, it was not error to permit Munroe to testify as to his own sense of the state of negotiations, as long as the jury was not misled into thinking the testimony was anything more than evidence bearing on the behavior and perception of the parties.
The instructions might have been stated differently, but the court was not convinced that the jury was misled by them, as given.
The “objective” theory of contracts (applied in this case) places a greater emphasis on one party’s right to rely on the reasonable expectations created by the apparent agreement of the other, and also contributes to the needed security of contracts in a commercial economy.