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Anderson v. Douglas & Lomason Co. - 540 N.W.2d 277 (Iowa 1995)


All contracts must contain mutual assent; mode of assent is termed offer and acceptance. An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. The Supreme Court of Iowa looks for the existence of an offer objectively, not subjectively.


Plaintiff Terry Anderson worked for defendant Douglas & Lomason Company ("DLC"); his employment was terminated after a box of company pencils was found in his truck. DLC's employee handbook contained a progressive discipline policy, including progressive discipline for unauthorized possession of company property. The handbook contained explicit disclaimer language that nothing in the handbook was to be construed as creating any sort of contract. Anderson never read the entire handbook. Anderson filed a breach of contract action against DLC in Iowa state court. Anderson claimed that he could not be fired because the punishment for a first offense of unauthorized possession of company property was a written warning, according to the handbook. DLC file a motion for summary judgment, which the trial court granted. Anderson appealed.


Was there an employment contract between DLC and Anderson that barred DLC from terminating Anderson at any time?




The state supreme court affirmed the trial court's decision. The court first ruled that DLC's handbook did not constitute an offer to Anderson to utilize progressive disciplinary procedures. The court first rejected DLC's claim that because Anderson never read the progressive disciplinary section of the handbook there was no acceptance of DLC's offer, if any, to apply those disciplinary measures. It was immaterial that Anderson had not read the handbook; he would have been protected by it as a member of the class of persons to whom it applied if there was a bona fide contract. The court went on to hold that DLC's handbook was not sufficiently definite to constitute a valid offer. The court agreed with DLC that the handbook contained no guarantees that it would always follow the progressive discipline procedures, and the handbook included a written disclaimer that expressly stated that there was no intent to create a contract. Thus, no offer existed for Anderson to accept. The disclaimer applied to the entire handbook, and there was no employment contract created between DLC and Anderson. As such, Anderson was an at-will employee and could be terminated at any time.

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