Whenever the case is such as to require a notice of acceptance, it is not enough for the offeree to express mental assent, or even to do some overt act that is not known to the offeror and that is not one that constitutes a customary method of giving notice. If the overt act is one that clearly expresses an intention to accept the specific offer and is in fact known by the offeror, there is an effective acceptance. This is because the offeror has actual knowledge.
Plaintiff employees received and signed written employment contracts that offered shares in defendant employer's net profits, but did not return the signed contracts to defendant. Defendant refused payment when plaintiffs quit and claimed there were no valid contracts. The district court held that plaintiffs had contracts and instructed the jury not to consider carryover losses in calculating net profits for a partial year. On appeal, the court affirmed that plaintiffs had contracts because defendant had not specified a means of acceptance, so a contact was formed when plaintiffs signed the contracts and communicated their acceptance to defendant by continuing to work and in conversations.
Did the plaintiff employees have a valid employment contract?
The employment contracts did not in definitive words require that the employees complete the fiscal year before their entitlements matured. The contracts did not even specify that the employees were obligated to remain with the company for a full fiscal year. Under these circumstances we are constrained to apply the Texas rule that "ordinarily an employee entitled to a percent of the profits may on termination of his employment within a compensation period recover his share of the profits earned up to the date of termination."
Thus, the court affirmed that plaintiff employees had valid employment contracts that entitled them to shares of defendant employer's net profits. The court held that the contracts were silent as to the meaning of "net profits" rather than ambiguous, so it construed the term to avoid economic distortion and reversed and remanded so that the jury could consider defendant's carryover losses in assessing damages.