The Law Office of Kurt H King

Case on point is Warren v. Tribune Broadcasting Company, LLC, 512 S.W.3d 860 (Mo. Ct. App. W.D. 2017).  There, Tribune appealed from a jury verdict awarding Warren an additional $34,000 of bonus on her count for breach of an oral agreement/contract.  The defense claimed that the bonus compensation arrangement was too vague and indefinite to constitute a valid and binding contract.  There the bonus formula varied as set by Tribune.

After listing five essential elements of a contract—(1) parties competent to contract, (2) proper subject matter, (3) legal consideration, (4) mutuality of agreement, (5) mutuality of obligation—the Western District of the Missouri Court of Appeals addressed Tribune’s argument that the fourth element of mutuality of agreement was absent because while Tribune contracted with Warren to pay her a bonus, the manner in which bonus was calculated varied.

The Court of Appeals rejected Tribune’s argument that the bonus agreement was too vague and indefinite to form a binding contract, instead finding a valid oral agreement existed such that if sales exceeded 101% of the revenue goal for that year, then Warren would receive a bonus that was determined by the formula then set by Tribune to compute bonuses.  The Court reasoned:

“While a contract’s essential terms must be sufficiently definite, the detail or particulars of the contract need not be.”

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“[A] court is guided by principles of law applied with common sense and in the light of experience.”

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“A contract should not be held void for uncertainty if there is a possibility of giving meaning to the agreement.”

512 S.W.3d at 864-65 (inside quotations and parentheses omitted).

The takeaway from the Warren v. Tribune Broadcasting case is it is not necessary that the parties’ agreement initially specify the precise steps by which plaintiff’s bonus would be calculated, as that may be set later. The contract/agreement was definite enough without the details and particulars as to how the bonus would be calculated since the parties did in fact agree that a bonus would be paid under certain circumstances.

But, for an agreement to be definite enough to be enforced by a Missouri court, essential terms such as (1) the price or compensation to be paid, and (2) what the other party is to perform or provide in return for that price/compensation, certainly should be clearly stated. Olathe Millwork Company v. Dulin, 189 S.W.3d 199 (Mo. Ct. App. W.D. 2006) (no valid contact to build home due to there being only an estimated purchase price, as well as inaccurate and incomplete specifications of labor and materials to not just reconstruct the owners home after it was destroyed by fire, but rather build a significantly larger house with upgraded materials and components).

Kurt H. King

Law Office of Kurt H. King, 20 E. Franklin, Liberty, Missouri 64068; 816.781.6000

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