Cook v. Coldwell Banker/Frank Laiben Realty Co.
967 S.W.2d 654 (1998)
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Rule of Law:
An offer for a unilateral contract may not be revoked by the offeror after the offeree has accepted the offer by rendering substantial performance.
Facts:
- Mary Ellen Cook, a licensed real estate agent, worked as an independent contractor for Coldwell Banker/Frank Laiben Realty Co. (Coldwell Banker).
- In March 1991, Coldwell Banker, through its co-owner Frank Laiben, orally announced a bonus program for its agents for the calendar year 1991, with bonuses tiered to commission earnings and payable at the end of the year.
- By September 1991, Cook had earned over $32,400 in commissions, substantially qualifying her for the bonus.
- At a sales meeting in September 1991, Laiben announced a modification to the bonus program, stating that bonuses would now be paid at a banquet in March 1992, and only to agents still with the company at that time.
- Cook continued to work for Coldwell Banker through the end of 1991, relying on the original bonus promise, and by year's end her total commission earnings were $75,638.47.
- In January 1992, Cook resigned from Coldwell Banker to take a position with another firm.
- Laiben subsequently informed Cook that she would not receive her bonus because she had not remained with the company until the March 1992 banquet.
Procedural Posture:
- Mary Ellen Cook sued Coldwell Banker/Frank Laiben Realty Co. in the trial court for breach of a bonus contract.
- The case was tried before a jury.
- The jury returned a verdict in favor of Cook and awarded her damages of $24,748.89.
- The trial court entered a judgment consistent with the jury's verdict.
- Coldwell Banker, the defendant, appealed the judgment to the Missouri Court of Appeals.
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Issue:
May an offeror revoke an offer for a unilateral contract after the offeree has rendered substantial performance?
Opinions:
Majority - Crane, Presiding Judge.
No. An offeror may not revoke an offer for a unilateral contract where the offeree has accepted the offer by rendering substantial performance. The court found that Coldwell Banker's bonus plan was an offer for a unilateral contract, which Cook could accept by performing, i.e., continuing her employment and earning commissions. While an offeror can generally withdraw an offer at any time before acceptance, an exception exists when the offeree has already rendered substantial performance. By September 1991, before Coldwell Banker attempted to modify the bonus terms, Cook had already earned over $32,400 in commissions. This constituted substantial performance, which supplied the consideration for the offer and made it irrevocable. Therefore, Coldwell Banker's attempt to modify the terms in September was ineffective, and Cook was entitled to the bonus based on the original terms announced in March.
Analysis:
This decision solidifies the application of the substantial performance doctrine to unilateral contract offers in the at-will employment context, specifically concerning bonus plans. It provides protection for employees who rely on such offers by preventing employers from changing the rules after the employee has already performed a significant portion of the required service. The ruling clarifies that acceptance of a unilateral contract offer is not an all-or-nothing event that only occurs at full completion, but rather that the offer becomes binding and irrevocable once performance has substantially begun. This precedent makes it more difficult for employers to use bonus offers as an incentive and then arbitrarily withdraw them before payment is due.
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