The Greg Allen Construction Co. v. Estelle case exemplifies germane undercurrents involved in constituting an effective acceptance of a contract. From the case, it is evident that Allen, an employee, shareholder, director and president of Greg Allen Construction Corporation, in 1996 entered into a contract with the Estelles’ to renovate their home in Indiana. Indeed, an offer was made by the offeror (the Estelles) to the offeree (Greg Allen Construction Co.) for the latter to undertake renovation works on a house owned by the former. From the analysis, it can be argued there was an implied agreement and acceptance of the offer was communicated to the offeror by the offeree by virtue of the fact that it was Allen who personally supervised the renovation works on the house. The offer and acceptance formula identifies a moment of formation when the parties involved read from the same script (LawSchool.com, 2012; Order & Siegelheim, 2008), and this can be implied in the case due to the fact that Allen and his Corporation willingly and knowingly undertook to renovate the Estelles’ house.
Any reasonable person would synthesize that Allen and his Corporation entered into a unilateral contract with the Estelles’ as he accepted the offer by offeror by performing his side of the bargain (LawSchool.com, 2012), in this case personally supervising the renovation of the house. Consequently, it can be argued that the Estelles’ made a promise to effect payment on the renovation works “in return for” Allen and his Corporation’s completing the works to a satisfactory level (Order & Siegelheim, 2008). In accepting the offer, Allen and his Corporation were therefore bound by the legal applications of the contract, and thus have a legal and personal liability for the unacceptable works done during renovation.
Available literature demonstrates that as the embodiment of the Corporation, a director or officer incurs no liability unless and until such a director or officer presumes personal liability (Grantham & Rickett, 1999). Equally, it is no defense to an action based on a contractual agreement for a director or officer to claim that they “…never intended to be bound by the agreement if under all the circumstances it is shown at trial that [their] conduct was such that it communicated to other party or parties that the defendant had in fact agreed” (LawSchool.com, 2012, para. 10). The Corporation is definitely in breach of the contractual terms for undertaking unsatisfactory renovation works, a fact that is well collaborated by the bank’s supervisor. As the director, Allen should have been bound by the principles of good faith, honesty, and the duty of care and skill (Dickinson, 2011). However, these principles seem lacking due to the substandard renovations, and hence the director is personally liable for the torts of the Corporation.
Although the case does not mention if Allen signed a contract with the Estelle’s regarding the renovation, a promise to pay him through credit obtained from Banc One was made as the latter (Allen and his Corporation) agreed to perform certain actions (renovations) which the latter would not otherwise do in the absence of the promise of payment (Order & Siegelheim, 2008). Indeed, according to LawSchool.com (2012), the performance of the requested action (renovations) demonstrates objectively Allen and his Corporation’s assent to the terms and conditions of the contract. Consequently, the facts of the case do not constitute the type of act protected by the corporate entity, suggesting that Allen is liable for the torts of his Corporation as he personally oversaw the shoddy renovations of the Indiana house.
Reference List
Dickinson, H. (2011). Directors and officers liability: The legal position in the United Kingdom. Web.
Grantham, R., & Rickett, C. (1999). Directors ‘tortuous’ liability: Contract, tort, or company law. The Modern Law Review, 62(1), 133-139.
LawSchool.com. (2012). Contracts law: Offer and acceptance. Web.
Order, A., & Siegelheim, A.J. (2008). Corporate liability exposure and the potential risk of individual director liability resulting from employment-related decisions: An analysis of recent case law recommendations on corporate governance. Labor Law Journal, 59(4), 297-317.