Coffman Industries, Inc. v. Gorman-Taber Co.
521 S.W.2d 763 · Missouri Court of Appeals · 1975
Facts
Beardsley Construction, general contractor for a sewage treatment plant, obtained a performance bond from Fidelity. Gorman-Taber, a subcontractor, had a dispute with Coffman Industries over damaged equipment. Beardsley defaulted, and Fidelity, the surety, allegedly made an oral promise to Gorman-Taber to pay the subcontract balance once the Coffman dispute was settled. Gorman-Taber settled with Coffman, but Fidelity refused to pay, claiming the oral contract was invalid or revoked.
Issue
Was there a valid and enforceable unilateral oral contract between Fidelity and Gorman-Taber for payment of the subcontract balance, and if so, was it supported by consideration, and was Fidelity's offer revoked before acceptance or rejected by counter-offers?
Holding
The court affirmed the judgment for Gorman-Taber, finding that a jury could reasonably conclude a valid unilateral contract existed, supported by consideration, and that Fidelity's offer was not effectively revoked before acceptance or rejected by Gorman-Taber's actions.
Rule
A unilateral contract is formed when an offer is accepted by performance of the requested act. Performance of a pre-existing legal duty can be valid consideration if the duty's existence was subject to an honest and reasonable dispute. An offeror cannot revoke an offer for a unilateral contract where the offeree has made substantial performance or acted in justifiable reliance (promissory estoppel).
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