Hoffman-La Roche, Inc. v. Campbell

The appellant, Hoffman-La Roche, Inc. (“Roche”), appeals from a judgment of the Etowah Circuit Court entered upon jury verdicts against it on both a count of breach of an employment contract and a count of fraud. The action had been filed by a former employee, Hugh Campbell. The jury assessed damages at $150,000. The determinative issue on appeal is whether certain provisions contained in an employee handbook issued by Roche modified the employment relationship which existed between Roche and Campbell so as to make the relationship terminable only by compliance with those provisions.

Campbell was hired by Roche as a pharmaceutical sales representative in October 1974. Prior to his acceptance of the position, he had engaged in several discussions with E.P. Delk, a division sales manager of Roche. During these discussions, he was informed of various benefits which Roche made available to its employees. Delk also discussed with Campbell the general responsibilities of a Roche salesman and a potential conflict of interest that existed because of Campbell’s part ownership of a drug store. He was given a pre-employment physical examination by a physician of Roche’s choosing and, even though he had earlier been involved in an accident which had caused serious injury to his left leg, was found physically able to perform the job.

Subsequently, Campbell and Roche entered into a written agreement, which was characterized by Delk during his testimony as “an agreement to employ Mr. Campbell for certain compensation and certain conditions stated in that contract.” The document itself stated that Campbell must, among other things, give up his interest in the drug store and agree not to disclose any trade secrets or confidential information to which he might become privy while in the employ of Roche, “[i]n consideration of the employment or continued employment of EMPLOYEE [Campbell] by Roche and of salary, wages or other compensation to be paid by ROCHE to EMPLOYEE.”

At the time of his hiring, Campbell was also given a copy of an employee handbook entitled “Roche Employee Handbook.” He was instructed to become familiar with the provisions of this handbook. During his employment at Roche, this handbook was “updated” on several occasions.

Campbell’s position with Roche required him to call upon physicians, drug stores, and hospitals in a specific territory in northeast Alabama. During his first year with Roche, he received various sales awards for outstanding performance. Among these awards was the highest award one could attain at Roche.

In 1978, however, Campbell began to experience health problems. Over the next several years, he received treatment at various hospitals, and various diagnoses were made before, ultimately, in April 1980, a correct diagnosis was made at the University of Alabama at Birmingham Hospital Infectious Disease Center. Surgery was performed as part of the treatment for his illness. As a result of this lingering illness, caused by an infectious organism that had attacked the bone in his left leg, Campbell’s work performance slipped.

On September 19, 1980, he was given an “unacceptable” performance rating by his supervisor. He was told that if his performance did not improve “in three months,” he would be terminated. It is not clear from the record whether this three-month period was to start immediately (as of September 19, 1980) or at some later date. What is clear, however, is that at this time Campbell was still recuperating from his surgery and was in a full leg cast. In early January 1981, he was placed on “probation.” Then, on January 31, 1981, he was informed by a telegram that he had been terminated. The telegram stated , no reason for this termination. However, Roche’s contention, as set out in the pre-trial order, was that the termination was based upon Campbell’s deteriorating job performance. The testimony at trial supported this contention. No other reason was given at trial.

Campbell testified that, in late 1978, he had talked with his supervisor, Delk, about his deteriorating health when he inquired as to whether he should take sick leave or keep on working. Delk advised him to “keep working.” Campbell testified that, throughout the time of his illness, he abid-ed by Delk’s instructions not to take sick leave. Instead, he would simply notify Delk and the company when he was sick, and he worked when he could. He used a form provided by the company to report these “sick” days. He testified that the use of this form was the “customary and accepted” method used to report sick days during his time with the company.

Delk’s testimony differed sharply from that of Campbell. Delk testified that, although Campbell had indicated earlier that he was “not 100%,” he never informed him. that his problems were affecting the performance of his work. He testified that Campbell never requested sick leave.

It was stipulated to by the parties that Roche became a self-insurer of the benefits program it made available to its employees. It was Campbell’s argument at trial that Roche had dismissed him so as to avoid paying him those benefits he had been promised through the issuance of an employee handbook.

On appeal from the judgment entered on the jury verdict against it, Roche argues that the employment agreement signed by Campbell did not set out a definite duration of employment and, therefore, that Campbell was an employee at will and could have been terminated for any reason or, even, for no reason at all. Campbell, on the other hand, argues that the jury’s verdict is correct because Roche limited its right to terminate him by its issuance of an employee handbook containing certain provisions specifying the only procedures by which an employee could be discharged. He argues that Roche did not follow those procedures.

By now, the rule is well settled in Alabama that an employee contract at will may be terminated by either party with or without cause or justification. See, e.g., Meeks v. Opp Cotton Mills, Inc., 459 So.2d 814 (Ala.1984); Hinrichs v. Tranquilaire Hospital, 352 So.2d 1130 (Ala.1977). This means a good reason, a wrong reason, or no reason. Hinrichs, supra.

The cases reveal that three elements must be shown to establish that an employment contract is one other than one terminable at will: (1) that there was a clear and unequivocal offer of lifetime employment or employment of definite duration, Bates v. Jim Walter Resources, Inc., 418 So.2d 903 (Ala.1982); (2) that the hiring agent had authority to bind the principal to a permanent employment contract, Alabama Mills, Inc. v. Smith, 237 Ala. 296, 186 So. 699 (1939); and (3) that the employee provided substantial consideration for the contract separate from the services to be rendered, United Security Life Ins. Co. v. Gregory, 281 Ala. 264, 201 So.2d 853 (1967). This Court has repeatedly refused to modify this doctrine even so much as to recognize a so-called public policy exception to its application. Thus, we have refused to recognize an exception where an employee had been dismissed for refusing to commit a criminal act, see, e.g., Jones v. Ethridge, 497 So.2d 1107 (Ala.1986); Williams v. Killough, 474 So.2d 680 (Ala.1985), or where an employee had been dismissed because he filed a workmen’s compensation claim, see Meeks v. Opp Cotton Mills, Inc., supra, or where an employee had been dismissed because he responded to a subpoena for jury duty, see Bender Ship Repair, Inc. v. Stevens, 379 So.2d 594 (Ala.1980).

The Court continues to adhere to the above-stated principles today. Indeed, in this case, we are not asked to abrogate the employment-at-will doctrine. We are asked only to determine what effect certain provisions set out in an employee handbook had upon the employer’s right to exercise its powers to terminate the employment relationship at will.

The appellant argues that this Court has already addressed this question in White v. Chelsea Industries, Inc., 425 So.2d 1090 (Ala.1983). In that case, it was said:

“Relying on the employee handbook, plaintiff alleges that an implied contract existed between himself and the company and that his employment was not terminable at will. A copy of the handbook was supplied to us with the record on appeal. After reviewing the handbook, we conclude that it does not create a binding employment agreement and that Mr. White’s employment relationship with the company was terminable at the will of either party. Courts faced with claims similar to that in the instant case in which employees contended that a handbook rose to the level of a contract of employment support our conclusion and have held that the handbook does not vary the general common law rule that an employee is terminable at will....”

425 So .2d at 1090.

The statements made in White are limited to the facts of that case, and are not to be taken as standing for the proposition that a handbook may never rise to the level of a contract. Indeed, in White, no determination on the effect of the handbook was made until after the contents of the handbook were “reviewed.” Such a review would not have been necessary if the issuance of a handbook could not, under any circumstances, have created a contractual agreement between the employer and the employee. Such a rule would also be contrary to traditional contract law principles. A review of our cases reveals that we have not applied such a rule.

In Duff v. American Cast Iron Pipe Co., 362 So.2d 886 (Ala.1978), this Court found that the violation of a rule contained in an employee handbook was a “contractual precondition to discharge.” 362 So.2d at 888. Similarly, in Green v. American Cast Iron Pipe Co., 446 So.2d 16 (Ala.1984), rules contained in an employee handbook were given contractual significance. See also Smith v. American Cast Iron Pipe Co., 370 So.2d 283 (Ala.1979).

It is argued that these cases do not actually stand for the proposition that a communication made by the issuance of an employee handbook can actually be given contractual status because all of these cases dealt with the unique relationship that exists between American Cast Iron Pipe Company (“ACIPCO”) and its employees. In Farlow v. Adams, 474 So.2d 53, 56 (Ala.1985), it was said:

“The case at hand involves a unique situation where employment contract principles are not exclusively applicable, and neither are principles of law concerning trusts exclusively applicable. ACIP-CO’s unique corporate structure is such that this Court is presented with a case of first impression which requires us to harmonize these two areas of the law involving the rights of employees.”

(Emphasis added.)

While we acknowledge that the relationship between ACIPCO and its employees was unique and that, indeed, the relationship was not governed “exclusively” by the principles of either contracts or trusts, this does not detract from the fact that, in those cases, the provisions of the handbooks were given contractual force.

Further, we note that the “ACIPCO cases” are not the only cases in which this Court has given contractual significance to the language used in an employee handbook. In Davis V. Marshall, 404 So.2d 642, 644-45 (Ala.1981), for example, this Court reversed a summary judgment that had been granted against the plaintiff and said:

“The theories upon which Davis contends she is entitled to recover from Mann’s, although not clearly articulated in her complaint, seem to be:

“III. That Mann’s breached an agreement, embodied in its Employee Handbook, to pay Davis for holidays, vacations, and overtime.

“As to ... Ill above, it is possible there could be a scintilla of proof of a conceivable set of facts that might create genuine issues of material facts permitting recovery under a cognizable theory or theories of law.” (Footnote omitted.)

Indeed, our examination of a number of cases from other jurisdictions that have considered the issue reveals that an increasing number of jurisdictions have given contractual effect to language contained in handbooks. See, e.g., Vinyard v. King, 728 F.2d 428 (10th Cir.1984); Greene v. Howard University, 412 F.2d 1128 (D.C. Cir.1969); Leikvold v. Valley View Community Hospital, 141 Ariz. 544, 688 P.2d 170 (1984) (en banc); Pugh v. See’s Candies, Inc., 116 Cal.App.3d 311, 171 Cal. Rptr. 917 (1981); Salimi v. Farmers Ins. Group, 684 P.2d 264 (Colo.Ct.App.1984); Piper v. Board of Trustees, 99 Ill.App.3d 752, 55 Ill.Dec. 287, 426 N.E.2d 262 (1981); Dahl v. Brunswick Corp., 277 Md. 471, 356 A.2d 221 (1976); Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980); Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983); Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983); Forrester v. Parker, 93 N.M. 781, 606 P.2d 191 (1980); Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 443 N.E.2d 441, 457 N.Y.S.2d 193 (1982); Langdon v. Saga Corp., 569 P.2d 524 (Okla.Ct.App.1976); Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081 (1984) (en banc).

These courts have recognized, as we do, that all employee handbooks are not simply “ ‘corporate illusions], “full of sound ... signifying nothing.” ’ ” Weiner v. McGraw-Hill, Inc., 83 A.D.2d 810, at 810-11, 442 N.Y.S.2d 11, 11 (1981), Kupferman, J., dissenting, quoting W. Shakespeare, Macbeth, V, v, 27-28, as quoted in Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, at 462, 443 N.E.2d 441, at 443, 457 N.Y.S.2d 193, at 195 (1982). The two leading cases representative of those jurisdictions according legal significance to language contained in employee handbooks are Toussaint v. Blue Cross & Blue Shield, supra, and Pine River State Bank v. Mettille, supra.

In Toussaint, the Supreme Court of Michigan upheld a jury verdict for a plaintiff, an employee at will, who claimed he had been discharged without just cause in violation of his employer’s personnel manual, which provided that employees would be terminated for just cause only, pursuant to certain procedures. 408 Mich, at 595, 597-98, 292 N.W.2d 883-84. In doing so, it held that:

“1) a provision of an employment contract providing that an employee shall not be discharged except for cause is legally enforceable although the contract is not for a definite term — the term is ‘indefinite,’ and

“2) such a provision may become part of the contract either by express agreement, oral or written, or as a result of an employee’s legitimate expectations grounded in an employer’s policy statements.”

408 Mich, at 598, 292 N.W.2d at 885. It also held that:

“[EJmployer statements of policy, such as the Blue Cross Supervisory Manual and Guidelines, can give rise to contractual rights in employees without evidence that the parties mutually agreed that the policy statements would create contractual rights in the employee, and, hence, although the statement of policy is signed by neither party, can be unilaterally amended by the employer without notice to the employee, and contains no reference to a specific employee, his job description or compensation, and although no reference was made to the policy statement in preemployment interviews and the employee does not learn of its existence until after his hiring.”

408 Mich, at 614-15, 292 N.W.2d at 892.

The Toussaint court’s theory, basically, is one of estoppel, invoking the idea of reliance — although the rationale also recognizes that both parties, the employer and the employee, benefit from the establishment of employment policies:

“While an employer need not establish personnel policies or practices, where an employer chooses to establish such policies and practices and makes them known to its employees, the employment relationship is presumably enhanced. The employer secures an orderly, cooperative and loyal work force, and the employee the peace of mind associated with job security and the conviction that he will be treated fairly. No pre-employment negotiations need take place and the parties’ minds need not meet on the subject; nor does it matter that the employee knows nothing of the particulars of the employer’s policies and practices or that the employer may change them unilaterally. It is enough that the employer chooses, presumably in its own interest, to create an environment in which the employee believes that, whatever the personnel policies and practices, they are established and official at any given time, purport to be fair, and are applied consistently and uniformly to each employee. The employer has then created a situation ‘instinct with an obligation.’ ”

408 Mich, at 614-15, 292 N.W.2d at 892. (Footnote omitted.)

It was argued to the Toussaint court that “mutuality of obligation” was lacking in such a situation because, although the employer would be obligated to continue the relationship until the prescribed conditions had been met, the employee would not be so obligated. However, the court rejected this argument:

“The enforceability of a contract depends, however, on consideration and not mutuality of obligation. The proper inquiry is whether the employee has given consideration for the employer’s promise of employment.

“The ‘rule’ is useful, however, as a rule of construction. Because the parties began with complete freedom, the court will presume that they intended to obligate themselves to a relationship at will.

“To the extent that courts have seen the rule as one of substantive law rather than construction, they have misapplied language and principles found in earlier cases where the courts were merely attempting to discover and implement the intent of the parties.”

408 Mich, at 600, 292 N.W.2d at 885. (Footnote omitted.)

In Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983), the Supreme Court of Minnesota was faced with the issue of whether a handbook could become a part of an existing employment-at-will contract.

The Minnesota court approached the handbook problem as follows:

“Whether a handbook can become part of the employment contract raises such issues of contract formation as offer and acceptance and consideration.

“Generally speaking, a promise of employment on particular terms of unspecified duration, if in form an offer, and if accepted by the employee, may create a binding unilateral contract. The offer must be definite in form and must be communicated to the offeree. Whether a proposal is meant to be an offer for a unilateral contract is determined by the outward manifestations of the parties, not by their subjective intentions. Cederstrand v. Lutheran Brotherhood, 263 Minn. 520, 532, 117 N.W.2d 218, 221 (1962). An employer’s general statements of policy are no more than that and do not meet the contractual requirements for . an offer. Thus, in Degen v. Investors Diversified Services, Inc., 260 Minn. 424, 110 N.W.2d 863 (1961), where the employee was told he had a great future with the company and to consider his job as a ‘career situation,’ we said these statements did not constitute an offer for a lifetime employment contract.

“If the handbook language constitutes an offer, and the offer has been communicated by dissemination of the handbook to the employee, the next question is whether there has been an acceptance of the offer and consideration furnished for its enforceability. In the case of unilateral contracts for employment, where an at-will employee retains employment with knowledge of new or changed conditions, the new or changed conditions may become a contractual obligation. In this manner, an original employment contract may be modified or replaced by a subsequent unilateral contract. The employee’s retention of employment constitutes acceptance of the offer of a unilateral contract; by continuing to stay on the job, although free to leave, the employee supplies the necessary consideration for the offer. We have so held in Stream v. Continental Machines, Inc., 261 Minn. 289, 293, 111 N.W.2d 785, 788 (1961), and Hartung v. Billmeier, 243 Minn. 148, 66 N.W.2d 784 (1954) (employer’s promise of a bonus made after the employee started working held enforceable).

“We conclude, therefore, that personnel handbook provisions, if they meet the requirements for formation of a unilateral contract, may become enforceable as part of the original employment contract.”

333 N.W.2d 625-27. (Footnote omitted.)

We find the unilateral contract analysis set out in Pine River to be both consistent with sound traditional contract principles and in accord with existing Alabama case-law. In fact, the very same analysis has been applied by this Court in similar circumstances in the past.

In Louis Werner Sawmill Co. v. Vinson & Bolton, 220 Ala. 210, 124 So. 420 (1929), it was recognized that, although a unilateral contract that is wholly executory lacks mutuality and is unenforceable, to the extent the agreement has been performed by the promisee it is binding and enforceable:

“[W]here one party performs in reliance upon such an agreement, his performance raises, to its extent, a new consideration for the promise of the other.”

220 Ala. at 212, 124 So. at 422.

The concept of mutuality of contract was discussed as follows in Hill v. Rice, 259 Ala. 587, 67 So.2d 789 (1953).

“The respondents contend that the contracts lack mutuality because no obligation is placed on the complainant to provide any work for them from which they could derive compensation; that the contracts firmly bind the respondents, while under paragraph 2 thereof it is expressly provided that ‘there shall be no fixed minimum or other provision with regard to the total number of hours that the employee shall be actively engaged.’ We have no difficulty in concluding that so long as the contracts remained wholly executory and unperformed, they lacked that mutuality of obligation essential to an enforceable contract. As stated in Alabama City, G. & A. Ry. Co. v. Kyle, 202 Ala. 552, 558, 81 So. 54, 60:

“ ‘It is indispensable to the validity of a contract that it should be mutually obligatory upon both parties, or it will bind neither. * * *

“ ‘All contracts founded upon mutual promises between persons of full age must be obligatory upon both parties, so that each may have an action upon it, or neither will be bound. The whole doctrine rests, though, mainly upon the absence of a consideration to support the promise. * * * ’

“As indicated in the Kyle case, supra, a contract lacking in mutuality is unenforceable mainly because there is an absence of consideration moving from one party to the other. Whether there is sufficient consideration to give validity to contracts such as we have here depends upon the facts and circumstances in each particular case.

“... [T]he test of mutuality is not to be applied as of the time when the promises are made, but more properly as of the time when one or the other of the promises is sought to be enforced. It may be stated as accepted doctrine that absence of inceptive mutuality constitutes no defense to the enforcement of an executed contract supported by a sufficient consideration.

“Our cases approve the principle that although an agreement might not be binding on both parties at the time of its execution, it may be made so by performance under it. In Pratt Consolidated Coal Company v. Short, 191 Ala. 378, 391, 68 So. 63, 67, it is thus stated:

* * If the party in whose favor a “unilateral promise is made accept[s] its performance, or do[es] any act in recognition of its implied or intended, though unexpressed, consideration, this supplies the element of mutuality, and gives a right of action.” * *

“See also Majestic Coal Co. v. Anderson, 203 Ala. 233, 234, 82 So. 483; Jones v. Lanier, 198 Ala. 363, 73 So. 535; Pullman Co. v. Meyer, 195 Ala. 397, 401, 70 So. 763; Davis v. Williams, 121 Ala. 542, 546, 25 So. 704.”

259 Ala. at 594-95, 67 So.2d at 796-97. (Emphasis added.) Accord, Sherrill v. Alabama Appliance Co., 240 Ala. 46, 197 So. 1 (1940) (“if there is other consideration, there need not be” mutuality of obligation); Miller v. Thompson, 229 Ala. 267, 156 So. 773 (1934) (“performance supplies the element of mutuality necessary as a consideration to support the obligation” in a unilateral contract situation).

Just such an analysis was applied in Henderson Land & Lumber Co. v. Barber, 17 Ala.App. 337, 85 So. 35 (1920) to uphold the finding of an enforceable contract, though unilateral in nature, between an employer and employee when the employer promised to pay the employee a 5 percent bonus above the employee’s normal salary if he continued to work 4 months straight time, even though he was not required to do so. The Court of Appeals set out the analysis used in that case:

“The defendant, being a large sawmill operator, employing many men, and desiring continued, uninterrupted service from its employees, made and posted through the plant the following notice:

“ ‘To the employees of the Henderson Land & Lumber Company:

“ ‘Beginning February 1, 1918, we will give a 5 per cent bonus to every man in our employ (except men doing piece work), making four (4) months’ straight time. The 5 per cent will also apply to all time made extra or overtime and will be paid at the expiration of four (4) months.

“ ‘We want to impress upon each of you that it is very important that you be on hand and carry out your part of the work and do everything possible to keep the mill going, whether it is in your department or not, as we want to do everything in our power to help the Boys who are fighting for us.

‘“If, however, a man is sick and unable to work and is vouched for by the doctor as being unable to perform his duties, he is not to lose what portion of the four (4) months’ time he has made. Respectfully, “Henderson Land & Lumber Company.’

“The plaintiff knew nothing of this offer until after he had made the agreement to work for $135 per month, beginning February 1st, but after reading the notice did remain in the service of defendant and worked continually during the months of February, March, April, and May, and was paid therefor by the defendant $135 for each month’s work, but was not paid the bonus of 5 per cent, named in the notice, for which he now sues. There was some conflict in the evidence as to what took place and was said between defendant’s superintendent and plaintiff regarding the bonus, as to whether it applied to him, and this question was submitted to the jury, under the charge of the court.

“Theré is no mutuality in a unilateral contract, until the party claiming under it has complied with the terms of the proposition. When, however, one makes a promise conditioned upon the doing of an act by another, and the latter does the act, the contract is not void for want of mutuality, and the promisor is liable; for upon performance of the conditions by the promisee the contract becomes clothed with a valid consideration which relates back and renders the promise obligatory. 6 R.C.L. p. 687, § 94. It is an elementary principle that, where one publishes an offer, and before it is withdrawn another acts upon it, the one making the offer is bound to perform the promise; in other words, the [offer] becomes binding when the act is performed. Hilton v. Southwick, 17 Me. 303, 35 Am.Dec. 253; Morse v. Bellows, 7 N.H. 549, 28 Am.Dec. 372; Todd v. Weber, 95 N.Y. 181, 47 Am.Rep. 20; American Oak Extract Co. v. Ryan, 104 Ala. 274, 15 South. 807; Sheffield Furnace Co. v. Hull Coal & Coke Co., 101 Ala. 446, 14 South. 672.

“Under the terms of the offer published by defendant, it applied to ‘every man in our employ (except men doing piece work).’ Plaintiff was certainly in the employ of defendant at the time the offer was made, and performed service in that capacity for the term stipulated. We can see no reason why, if his testimony is to be believed, which we must do on appeal, he is not within the terms of the offer.”

17 Ala.App. at 338, 85 So. at 35-36.

The foregoing considered, we see no reason why a policy contained in an employee manual issued to an employee cannot become a binding promise once it is accepted by the employee through his continuing to work when he is not required to do so. Such a performance clearly provides any consideration necessary to the contract. The fact that the promise is communicated to the employee through the medium of a handbook, rather than by some other means, is simply of no consequence.

Of course, to become a binding promise, the language used in the handbook must be specific enough to constitute an actual offer rather than a mere general statement of policy. See Pine River, supra, at 626. However, whether a proposal is meant to be an offer for a unilateral contract is determined by the outward manifestations of the parties, rather than by their uncommunicated beliefs. See Mayo v. Andress, 373 So.2d 620 (Ala.1979). It is axiomatic that an offer must be communicated before it may be accepted. See generally, S. Williston & G. Thompson, Selections from Williston’s Treatise on the Law of Contracts, § 33, at 37 (Rev. ed. 1938). Indeed, if the employer does not wish the policies contained in an employee handbook to be construed as an offer for a unilateral contract, he is free to so state in the handbook. Thus, this Court has refused to hold the provisions of a handbook enforceable against an employer where the handbook at issue expressly stated the following:

“This Handbook and the policies contained herein do not in any way constitute, and should not be construed as a contract of employment between the employer and the employee, or a promise of employment.”

McClusky v. Unicare Health Facility, Inc., 484 So.2d 398, 400 (Ala.1986).

We do not find the indefinite nature of the time period for performance to be a bar to enforcement of a unilateral contract. On this issue, we agree with the reasoning found in Pine River:

“The ... argument, that because the contract specifies no duration the parties did not intend any job termination restrictions to be binding, is without merit. The argument misconstrues the at-will rule, which is only a rule of contract construction, as a rule imposing substantive limits to the formation of a contract. See Restatement (Second) of Agency, § 442, comment a (inference that employment is at-will may be rebutted by specific terms of the agreement).

“The cases which reason that the at-will rule takes precedence over even explicit job termination restraints, simply because the contract is of indefinite duration, misapply the at-will rule of construction as a rule of substantive limitation on contract formation. See, e.g., Johnson v. National Beef Packing Co., 220 Kan. 52, 551 P.2d 779 (1976); Shaw v. S.S. Kresge, 167 Ind.App. 1, 7, 328 N.E.2d 775, 779 (1975); Uriarte v. Perez-Molina, 434 F.Supp. 76 (D.C.D.C.1977). It should not be necessary for an employee to prove a contract is of ‘permanent’ employment or for a specified term in order to avoid summary dismissal if the parties have agreed otherwise. There is no reason why the at-will presumption needs to be construed as a limit on the parties’ freedom to contract. If the parties choose to provide in their employment contract of an indefinite duration for provisions of job security, they should be able to do so.”

333 N.W.2d at 628. Indeed, the rules set out above regarding the enforcement of a unilateral contract do not require that any definite time period for performance have been set or agreed to. Instead, the rule is stated that the agreement is enforceable to the extent that it has been performed. See, e.g., Louis Werner Sawmill Co., supra.

Neither do we find that the possibility of enforcement of those specific policies set out in an employee handbook creates an unduly inflexible environment for the issuance of employment guidelines, rules, policies, or benefits. As explained by the Oklahoma Court of Appeals in Langdon v. Saga Corp., 569 P.2d 524, 527-28 (Okla.Ct.App.1976), an employer is bound by the stated policies only to the extent that the benefits have accrued or performance has been made by the employee:

“Where an employee at will forgoes options to refuse future performance in reliance or in partial reliance on articulated personnel policies of the employer, the employer is bound by those policies insofar as they have accrued to an employee for performance rendered while they were in effect and have not been excluded or modified by another valid contractual arrangement. The employer remains free to modify such policies prospectively and to the extent there is no accrual, as in the case of vacation and severance pay in the instant contract. ...”

See also Pine River, 333 N.W.2d at 627 (“Unilateral contract modification ... may be a repetitive process. Language in the handbook itself may reserve discretion to the employer in certain matters or reserve the right to amend or modify the handbook provisions.”); Toussaint, 408 Mich, at 619, 292 N.W.2d at 894-95 (“Employers can make known to their employees that personnel policies are subject to unilateral changes by the employer”). In this sense, the unilateral offer made by the employer may be characterized, as it was by one commentator, as follows: “I promise I will not dismiss you without cause (or without exhausting specified procedures) unless I change this policy before you are discharged.” H. Perritt, Employee Dismissal Law and Practice, 150 (1984).

In summary, we find that the language contained in a handbook can be sufficient to constitute an offer to create a binding unilateral contract. The existence of such a contract is determined by applying the following analysis to the facts of each case: First, the language contained in the handbook must be examined to see if it is specific enough to constitute an offer. Second, the offer must have been communicated to the employee by issuance of ⅛⅜ handbook, or otherwise. . Third, the employee must have accepted the offer by retaining employment after he has become generally aware of the offer. His actual performance supplies the necessary consideration.

Applying the above analysis to the facts of the present case, we find that, as a matter of law, there existed a unilateral contract between Campbell and Roche.

The handbook at issue contains, in pertinent part, the following language:

“This handbook is for all employees of Hoffman-La Roche, Inc.

“This handbook is designed to make it easy for us to work together at Roche. It describes the various aspects of our careers at Roche. All of the areas that affect our relationship with the company are discussed here in simple terms.

“The handbook explains policies and practices that are quite detailed — detailed because they must be applied fairly to many different people in many different situations. The actual documents that set forth company policies and practices will govern if there is ever any difference in interpretation between this handbook and the documents.

“The handbook should be your first reference if you have a question about company procedure in any of the areas listed in the tables of contents. If you don’t find what you need, then check with your supervisors.

“The handbook is comprehensive in the number of subjects it covers; in addition, it includes examples of various personnel and pay policies in action so that you can see more clearly how they might affect you. If you need to discuss the exact effect of a procedure on your own particular situation, your supervisor can help you.

“Because personnel and pay policies and company practices are designed by people for people, they change from time to time. Your handbook will reflect this, it will be updated periodically so that the information is always as current as possible. When a new page is issued, simply use the date and section codes to locate the old page in the handbook and then replace it.”

In a section entitled “termination of employment-permanent employees” is the following:

“If Roche has to terminate your employment, you will be given a printed explanation of the termination process (Termination Procedure Forms). The material summarizes the status of your benefits, but you should also look at your printed benefit materials for further information.

“(This paragraph does not apply to field sales personnel.) Before you terminate you will be asked to have a physical examination at Employee Health Services and to obtain clearance signatures indicating that you have returned your identification badge and completed any other duties related to ending association with your department. You will also be asked to have a final interview with the Personnel Department. That department will review all termination procedures with you to make sure you understand and comply with them.

“As part of the process, the Payroll Department and the HLR Credit Union will determine whether any money is owed you or whether you owe any money. Arrangments will be made for repayment.

“You will be paid for all time worked through your last day.”

In this same section, under the title “types of termination” is the following:

“There are five types of termination.

“Retirement under the Retirement Plan: When you retire you will receive a pension from Roche. You’ll be given a booklet explaining all of the benefits that are available to you through Roche.

“Resignation: If you voluntarily leave the company you must give at least two weeks’ notice so that your supervisor can arrange for transition of work and/or fill your position.

“Layoff: Circumstances such as lack of work may force the company to terminate you subject to recall. If you are recalled within a year of the date of layoff, you will be reinstated without loss of seniority.

“Discharge for Performance: The company will discharge an employee who is considered unable to meet the requirements of his or her job. This person is not eligible for recall or reinstatement.

“Disciplinary Discharge: The company can terminate employment on the grounds of misconduct or willful negligence. In such cases, an employee will not be considered for reemployment.”

The language used in this handbook is clear enough that an employee reading it could reasonably believe that, as long as he worked within the guidelines set out in the handbook, he would not be terminated until all procedures set out in the handbook had been followed, including the reasons and circumstances for termination in the handbook.

It is not disputed that Campbell continued to work after the handbook had been issued. By his retention of employment after he had become aware of the handbook (offer), he accepted the unilateral contract. His performance under this contract supplied the necessary consideration and bound Roche to follow the procedures set out in the handbook. There has been no argument made, nor is there any inference possible from the record, that these policies had been modified by the issuance of any new or modified handbook after the one in the record had been issued.

Campbell argues that Roche breached this contract by discharging him for unsatisfactory performance of his job when (1) he was too ill to satisfactorily perform the job and (2) he had been instructed by his supervisor not to take advantage of the sick leave benefits which were available to him as a Roche employee. He points out that, by the express language of the handbook, Roche agreed that the policies and practices expressed therein would be “applied fairly.” We note that evidence exists in the record from which a jury could have found both that Campbell was too ill to satisfactorily perform the job and also that he had been instructed by his supervisor, who was aware of the physical problems Campbell was having, not to take advantage of the company’s sick leave benefits.

Campbell expresses this argument as Roche’s having violated its obligation to perform the contract in “good faith and fair dealing.” Roche, on the other hand, argues that it was not required to act with good faith. More specifically, it argues that the trial court erred in giving the following charge to the jury:

“I further charge the jury that the law of this state writes into every contract, an implied obligation or duty of good faith and fair dealing between the parties to the contract. In determining whether the employee was wrongfully discharged as plaintiff claims in this case, you must decide whether the employer used or utilized good faith and fair dealing in making its decision to terminate the plaintiff under all of the facts and circumstances which you have heard from the evidence. Specifically, in making a determination to discharge the employee for failure to live up to performance standards of the employee, in light of the evidence presented by the plaintiff as to the plaintiffs incapacity or disability during this period of time, it and [sic] the Court further charges the jury that the physical and mental capability of the plaintiff, to comply with such performance standards of the employer, was an implied condition precedent to violation of the company rule or standard. In other words, the Court charges you that you must find that the employee, the plaintiff in this instance, was physically and mentally capable of performing up to the company’s standards before you can find that the employee violated the performance standards set by the company.”

Specifically, Roche argues that the effect of this instruction was to “submit to the jury a claim for bad faith on plaintiffs termination of employment.”

We find no error in the judge’s charge and agree with Campbell’s argument that Roche’s discharge of him, under the circumstances of the present case as they could have been found by the jury, constitutes a breach of contract.

Alabama recognizes the general rule that “every contract does imply [an obligation of] good faith and fair dealing.” Kennedy Electric Co. v. Moore-Handley, Inc., 437 So.2d 76 (Ala.1983); see also Harrell v. Reynolds Metals Co., 495 So.2d 1381 (Ala. 1986). This obligation is described in Cor-bin on Contracts, § 654A(A) (Kaufman supp.1984) (hereinafter cited as “Corbin § —”) as simply “the obligation to preserve the spirit of the bargain rather than the form,” and that “[i]t is moreover a group of specific rules which evolved to insure that the basic purpose of contract law is carried out, the protection of reasonable expectations of parties induced by promise.” Apparently, a majority of jurisdictions now recognize this obligation. See Corbin § 654A(B).

One facet of this obligation of good faith is explained in Corbin § 654E(A):

“It is a basic principle that justice is not served when somebody gets something for nothing, other than by the conscious free will of the giver.... The spirit of the bargain usually contemplates that a contracting party shall not try to deprive the other of the consideration for which he bargained, though of course there are exceptions; Corbin gives the example of the bet that one’s team will win a sporting contest, where vigorous attempts to deprive the other party of victory are contemplated. Besides forbidding attempts to prevent the other party from getting the consideration for which he bargained through breach or use of technical provisions contained in the contract, this principle of justice forbids attempts by the actor to get more for himself than the other party reasonably contemplated giving him at the time the contractual relationship was entered into, absent good cause. Either kind of motive to evade the spirit of the bargain is condemned....”

Roche violated this obligation when it discharged Campbell for unsatisfactory performance even though it was aware of his physical inability to perform satisfactorily.

We note that this obligation of “good faith” arises as part of the contract. Its breach does not give rise to an action in tort. Harrell, supra; Kennedy, supra. On the facts of the present case, it may simply be expressed as a finding that there necessarily exists an implied or constructive condition precedent to the firing of Campbell for unsatisfactory performance, i.e., that he be physically able to satisfactorily perform. We made a similar determination in Duff v. American Cast Iron Pipe Co., supra.

In Duff, an employee had been discharged for violating a company rule which provided that an employee could be discharged for:

“Absence for a period of 14 calendar days without acceptable excuse made known to immediate supervisor.”

The employee sued for reinstatement and back pay. The evidence showed that, at the time the 14-day period had ended, the employee was mentally incapable of complying with the rule. We reversed a judgment for the employer, reasoning as follows:

“We believe that Rule 24 necessarily contains an implied condition precedent, presupposing that the employee affected by it is mentally and/or physically capable of compliance. In this case the facts establish without dispute that Duff was mentally incapacitated and could not perform his responsibilities under the rule on the 14th day of the Rule 24 period. ACIPCO admits as much.

“In American Chain & Cable Co., 48 LA (Labor Arbitration Reports) 1369, Arbitrator David Keefe found that an employer was not justified in discharging an employee who was absent without notice where a psychosis caused her to lose her ability to respond to ordinary responsibilities. The arbitrator said:

“‘In every case, the employee is expected to and must comply with the rule for reporting the absence and going on sick-leave. The only obvious exclusion from this all-embracing responsibility would be when the patient is in coma, as from a serious accident, and has not the power to make or instigate such a report. It is rather difficult to conceive that a person, physically capable ... could, from psychotic reasons, lose the ability to respond to ordinary responsibilities. Such, however, is the case — and the actuality in this instance.’

“Because of his incapacity we hold discharge was improper on June 7th and therefore wrongful under law. Because an acceptable reason for absence was present, Plant Rule 24 was not violated and thus discharge under it was improper....”

362 So.2d at 888-89.

Even if such an obligation of good faith and fair dealing was not necessarily implied by law, we would find such an obligation, on Roche’s part, to exist in the present case. As is aptly pointed out by counsel for Campbell, the language of the handbook expressly stated that the policies and practices of Roche would be “applied fairly.” Given this language, it cannot be said that it was within the reasonable expectations of the parties that Campbell could be discharged for unsatisfactory performance when he was not physically capable of satisfactorily performing.

Roche next argues that the trial court committed reversible error when instructing the jury as to the damages assessable in this case. Our review of the record indicates, however, that the plaintiff’s testimony of actual damages, as computed by an expert witness, placed this damages as high as $156,839. The defendant offered no evidence as to the nature and extent of the damages. The jury returned a verdict assessing plaintiff’s damages at $150,000, and there has been no complaint that such an award was excessive. Therefore, even if it were conceded that the court erred in charging the jury on damages, and it is not so conceded, no injury resulted to the defendant therefrom. Therefore, there can be no reversal on that basis. See North British & Mercantile Ins. Co. v. Sciandra, 256 Ala. 409, 54 So.2d 764 (1951); Lehigh Portland Cement Co. v. Higginbotham, 232 Ala. 235, 167 So. 259 (1936); Corry v. Sylvia Y Cia, 192 Ala. 550, 68 So. 891 (1915).

All other issues having been either addressed in or intentionally pretermitted in the foregoing discussion, the judgment of the trial court is affirmed.

AFFIRMED.

JONES, ALMON, SHORES and ADAMS, JJ., concur.

MADDOX and HOUSTON, JJ., dissent.

. Both Meeks and Bender Ship Repair have been effectively abrogated by the legislature’s adoption of statutory rules to the contrary. See Code of 1975, § 12-16-8.1, which overruled Bender Ship Repair and Code of 1975, § 25-5-11.1, which overruled Meeks.

We especially note that this Court’s decision in Harrell v. Reynolds Metals Co., 495 So.2d 1381 (Ala.1986), although it discusses public policy, should not be read as recognizing a public policy exception. Indeed, the cases cited in this case decided after Harrell indicate that it cannot be so read.

. While we also find much of what the Tous-saint court stated to be well-reasoned and logical, we- find the actual analysis used in Pine River to be more consistent with traditional contract principles than Toussaint. The analysis used and the result in Toussaint is similar to that found in Pine River, but Pine River is more specific in its analysis.

. Interestingly, under this analysis, it does not matter whether the offer is made at the time of original hiring or after the employee has been hired. Consideration is supplied by the employee’s performance, in either context, when he is not required to perform. See Pine River, 333 N.W.2d at 629-30.

. Thus, in a very real sense, the employee is still an employee "at-will." He may still be dismissed for any reason, good or bad, as long as the provisions found in the company handbooks are followed and he is given credit for those benefits which have accrued.

. For example, in a section entitled "constructive discipline," the following promise is made:

"The only restrictions the company puts on your conduct are those necessary to insure proper operation of the business, safe working conditions, and protection of the company’s property and processes.

“Occasionally, an employee may violate a rule of good conduct. In such a case, the disciplinary procedures outlined here are applied. The purpose of disciplinary action is to correct the deficiency and help make an employee more valuable. Penalties are used only as a last resort.

"Before taking any disciplinary action, a supervisor attempts to get all the facts: Was the misconduct accidental or willful? Has the employee had similar incidents? Did other circumstances contribute to the incident?

"If disciplinary action is necessary, it generally is taken in the order below, although a serious offense might warrant taking more serious action.

"1. Oral warnings in private are an effort to correct the employee’s actions.

“2. Written warnings are a more serious attempt at correction and become part of an employee’s records.

"3. Suspension occurs only with the approval of the department head and division personnel manager and is without pay.

"4. Discharge occurs when management believes the employee will not change behavior patterns.

“The types of offenses for which the four-step disciplinary process would generally be followed include: tardiness; poor work performance because of negligence; excessive absenteeism; violation of company traffic or parking regulations; use of profane or abusive language; horseplay or pranks; unauthorized solicitations of any kind; posting or distributing unauthorized materials.

‘The types of serious offenses that might lead to discharge or suspension as a first penalty include: unauthorized removal, possession, or destruction of company or employee property; conviction of homicide, rape, assault and battery, assault with a deadly weapon, grand larceny, illegal possession or sale of narcotics, or other crime of violence; unauthorized possession on company property of intoxicating beverages, narcotics, or substances that state or federal statutes define as controlled; theft or unauthorized sale, use, or diversion of substances defined by state or federal statutes as controlled; unauthorized possession of weapons of any kind on company property; gambling on company property; insubordination or willful disregard of an order; willful neglect of duty; willful disregard of safety instructions; willful falsification of company records; smoking in research, manufacturing, warehouse, or storage areas (other than in designated smoking areas); absence for three consecutive workdays without reporting to your supervisor; knowingly writing on someone else’s time card or falsifying a time card.

"The development and manufacture of controlled substances — our business — is very sensitive. Roche must meet security requirements set by the Drug Enforcement Agency. If you know of drug diversion or theft by an employee, it is your responsibilty to inform the Security Department. Information will be kept confidential and reasonable steps will be taken to protect your identity.

"Taking pictures inside the plant is not allowed, although it is not necessarily a disciplinary offense. If you have to take photographs connected with your work, contact the Manager of Audio Visual Services.”

An employee could reasonably, and justifiably, believe that, unless he had committed one of the expressly enumerated “serious offenses,” the disciplinary pattern would follow the four-step process listed in the manual.

We note that Roche argues in its brief .that Campbell was actually fired for "insubordination” — one of the. enumerated serious offenses — and could, therefore, be discharged for a first offense. However, no such argument was made at trial. Therefore, it should not be considered. See, e.g., First National Bank of Pulaski, Tennessee v. Thomas, 453 So.2d 1313 (Ala.1984). Even if it had been argued, it is clear that whether or not, as a matter of fact, the discharge had been made because of insubordination would have been a question of fact for the jury. The jury could have decided the issue adversely to Roche.

. There is some dispute as to whether the handbook at issue was actually issued after he had began working for Roche or at the time he was hired. As explained earlier, the resolution of this fact is of no significance as long as Campbell continued to work after he became aware of the handbook policies.

. We do not find it necessary to set out these benefits verbatim, as their existence has never been in dispute.