Akers v. J.B. Sedberry, Inc.

Contracts Case Brief

Citation  Akers v. J.B. Sedberry, Inc.

 Court of Appeals of Tennessee, 1955
 39 Tenn. App. 633, 286 S.W.2d 617 (1955)
 (Employee) v. (Employer)
Parties  Π Mr. Akers & Mr. Whitsitt (Employee)
 Mrs. M.B. Sedberry, owner of J.B. Sedberry, Inc. (Employer)

Instant Facts  AN OFFEREE WHO COMMUNICATES A DEFINITE REJECTION LOSES THE

POWER OF ACCEPTANCE
 The owner of a manufacturing and distributing company sought to accept
two employees’ offers of resignation after rejecting the offers when she
initially received them in a personal meeting with the employees.

Procedural History  Appeal to the Court of Appeals of Tennessee challenging a decree of the
Chancery Court awarding damages for breach of contract.

Facts  Concerned about the future of the company for which they worked, Mr.
Akers (P) and Mr. Whitsitt (P) flew to Nashville to visit their employer
Mrs. M.B. Sedberry (D), owner of J.B. Sedberry, Inc.
 At the commencement of the meeting both Akers (P) and Whitsitt (P)
offered to tender their resignations on a ninety-day notice, as a sign of
good faith for voicing concerns about their manager.
 At that time, Mrs. Sedberry (D) did not accept the resignations.
 She instead proceeded to discuss business matters with both of them for
the rest of the day.
 Mrs. Sedberry (D) also gave the two men instructions to be followed upon
their return to Texas.
 No further mention was made of the offers for resignation and Mrs.
Sedberry (D) gave no other indication that she was leaving the matter up
for consideration.
 The following Monday, Mrs. Sedberry (D) sent to Akers (P) and Whitsitt
(P) telegrams stating that their resignations were accepted, effective
immediately.
 The two men replied with a letter stating that they had no open or
outstanding offer to resign and that they expected the remainder of their
employment contracts to be honored.

Issue  Does an offer of resignation tendered and rejected in a face to face

conversation remain open after the cessation of the conversation?

Holding  An offer made during the course of a face-to-face conversation expires

either by its terms or at the end of the conversation if no express
expiration is provided.

Rules 

Decision  Affirmed.
Reasoning  (Felts, J.) No. When an offer for resignation is tendered in person and is
silent as to the time allowed for acceptance, the employer has until the
end of the conversation to accept.
 The evidence clearly establishes that Akers (P) and Whitsitt (P) expected
an immediate answer to their offers to resign.
 There is nothing establishing the contrary.
 Even if the two men had intended their offers to extend beyond the
conversation, the power to accept was extinguished upon Mrs.
Sedberry’s (D) initial rejection.
 Although she did not expressly reject either offer and she testified that
she intended to take the matter under consideration, Mrs. Sedberry’s (D)
conduct did not disclose such an intent and led Akers (P) and Whitsitt (P)
to believe she was rejecting the offers.
 As a result, Mrs. Sedberry’s (D) attempt to terminate the two men was a
breach of her contractual obligations, for which she is liable.
 Finally, we reject Mrs. Sedberry’s (P) contention that Akers (P) and
Whitsitt (P) may only avail themselves to recovery for the ninety-day
period contained in their initial offers.
 As we have already established, after the end of the meeting between
the parties, there ceased to exist any ninety-day offer upon which Mrs.
Sedberry (P) could act.
 Affirmed.

Analysis  An offer made in a face to face conversation is valid until the end of the
conversation.
 When the meeting between Mrs. Sedberry (D) and Akers (P) and Whitsitt
(P) ended without an express acceptance of the two men’s resignations,
Mrs. Sedberry’s (D) power to accept was extinguished.
 Rejection of an offer will terminate the offeree’s power to accept.
 The court here concluded that Mrs. Sedberry’s (D) conduct led the two
men to believe she was rejecting the offer.
 Just as a contract can be based on the conduct of the parties, a contract
can be rejected based on the conduct of the offeree.
 The reason that rejection terminates the power of acceptance is that the
offeror is likely to act upon the belief that his offer has been rejected.
 Thus, the rule protects any reliance interest the offeror may have.
 Some have argued that the rule should not be applied when the offeror
remains inactive and has not changed his position.

Case Vocabulary 