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Essco Geometric v. Harvard Indus. - 46 F.3d 718 (8th Cir. 1995)

Rule:

An oral promise falls within the exception to the Statute of Frauds under Mo. Ann. Stat. § 400.2-201(3)(b) if it is a contract which does not satisfy the writing requirements of Mo. Ann. Stat. § 400.2-201(3)(b) but which is valid in other respects is enforceable if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made.

Under Missouri law, for an agent to have actual authority, he must establish that the principal has empowered him, either expressly or impliedly, to act on the principal's behalf. The principal can expressly confer authority by telling his agent what to do or by knowingly acquiescing to the agent's actions. Implied authority flows from express authority, and encompasses the power to act in ways reasonably necessary to accomplish the purpose for which express authority was granted. Missouri case law suggests that custom and the relations of the parties establish the parameters of implied actual authority. Evidence that an agent historically engaged in related conduct, without limitation, would be enough to support a jury question on the issue of actual authority. 

There are essentially three ways to establish apparent authority. One way is by the principal expressly and directly telling a third person that a second person has authority to act on the principal's behalf. Missouri courts also recognize two other methods of creating apparent authority, by prior acts and by position.

Facts:

Plaintiff Diversified, a materials supplier, was awarded damages on a written contract claim alleging that defendant Harvard, a manufacturer, was in breach of contract. The United States District Court for the Eastern District of Missouri entered judgment in the amount of $ 400,000 for the supplier, but summarily rejected its oral contract claim as unenforceable under the Missouri Statute of Frauds, Mo. Ann. Stat. § 400.2-201(3)(b). The supplier's action alleged that the manufacturer did not honor a written contract for materials covering a period from 1990 to1992, and an oral contract for materials covering the period from 1988 to 1990. The manufacturer claimed that its purchasing manager, Michael Gray, did not have the authority to bind the company with the written agreement. Diversified claimed that Harvard was in breach of the oral contract made by its former purchasing manager, Frank Best, who retired from Harvard in 1988. Diversified claimed that because Frank Best testified at his deposition, which was taken at least two years after he retired, that he entered into an oral contract with Diversified, the contract was enforceable as an exception to the Statute of Frauds. Both parties appealed.

Issue:

Was there a judicial admission by a party that an oral contract had been made, within the exception to the Statute of Frauds under Mo. Ann. Stat. § 400.2-201(3)(b)? Did Diversified establish claims for actual and apparent authority on the written contract to submit to the jury?

Answer:

No and Yes

Conclusion:

The United States Court of Appeals for the Eighth Circuit affirmed the district court’s judgment for Diversified on the written contract claim, and for the manufacturer on the oral contract claim. The court found that with respect to the written contract claim, 1) no job description outlined the nature of the purchasing manager’s responsibilities, but despite the lack of express authority, other evidence and the purchasing manager’s own testimony bore on his authority to bind the manufacturer, thus the matter was properly submitted to the jury; 2) as reasonable jurors could have disagreed as to the interpretation and the nature of the limitations the employer of the purchasing agent placed on him, the issue of the actual authority claim was also properly submitted to the jury; and 3) a reasonable jury could have concluded that the manufacturer created the appearance of authority through a combination of position and prior acts. Regarding Diversified’s cross-appeal, the statement regarding the oral contract for materials was not made when the retired purchasing manager, Frank Best, was an agent of the party, and thus there was no avoidance of the bar to recovery imposed by the Statute of Frauds, Mo. Ann. Stat. § 400.2-201(3)(b).

 

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