Meeting of the minds

Last updated

Meeting of the minds (also referred to as mutual agreement, mutual assent, or consensus ad idem) is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract. Formation of a contract is initiated with a proposal or offer. This condition or element is considered a requirement to the formation of a contract in some jurisdictions.

Contents

History

Richard Austen-Baker has suggested that the perpetuation of the idea of "meeting of minds" may come from a misunderstanding of the Latin term consensus ad idem, which actually means "agreement to the [same] thing". [1] There must be evidence that the parties had each, from an objective perspective, engaged in conduct manifesting their assent, and a contract will be formed when the parties have met such a requirement. [2]

Concept in academic work

German jurist Friedrich Carl von Savigny is usually credited with developing the will theory of contract in his work System des heutigen Römischen Rechts (1840). [3]

Sir Frederick Pollock is one person known for expounding the idea of a contract based on a meeting of minds, at which time it gained much support in the courts.

Oliver Wendell Holmes wrote in 1897 that a meeting of minds was really a fiction.

In the law of contract the use of moral phraseology led to equal confusion, as I have shown in part already, but only in part. Morals deal with the actual internal state of the individual's mind, what he actually intends. From the time of the Romans down to now, this mode of dealing has affected the language of the law as to contract, and the language used has reacted upon the thought. We talk about a contract as a meeting of the minds of the parties, and thence it is inferred in various cases that there is no contract because their minds have not met; that is, because they have intended different things or because one party has not known of the assent of the other. Yet nothing is more certain than that parties may be bound by a contract to things which neither of them intended, and when one does not know of the other's assent. Suppose a contract is executed in due form and in writing to deliver a lecture, mentioning no time. One of the parties thinks that the promise will be construed to mean at once, within a week. The other thinks that it means when he is ready. The court says that it means within a reasonable time. The parties are bound by the contract as it is interpreted by the court, yet neither of them meant what the court declares that they have said. In my opinion no one will understand the true theory of contract or be able even to discuss some fundamental questions intelligently until he has understood that all contracts are formal, that the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs — not on the parties' having meant the same thing but on their having said the same thing. [4]

The English contracts scholar Richard Austen-Baker has suggested that the perpetuation of the concept into current times is based on a confusion of it with the concept of a consensus ad idem ("agreement to the same [thing]") which is an undoubted requirement of synallagmatic contracting, and that this confusion may be the result of recent ignorance of Latin. [5]

Use in case law

In Household Fire and Carriage Accident Insurance Co Ltd v Grant (1879) 4 Ex D 216, Thesiger LJ said, in the course of a judgment on the postal rule,

Now, whatever in abstract discussion may be said as to the legal notion of its being necessary, in order to the effecting of a valid and binding contract, that the minds of the parties should be brought together at one and the same moment, that notion is practically the foundation of English law upon the subject of the formation of contracts. Unless therefore a contract constituted by correspondence is absolutely concluded at the moment that the continuing offer is accepted by the person to whom the offer is addressed, it is difficult to see how the two minds are ever to be brought together at one and the same moment... [6] But on the other hand it is a principle of law, as well established as the legal notion to which I have referred, that the minds of the two parties must be brought together by mutual communication. An acceptance, which only remains in the breast of the acceptor without being actually and by legal implication communicated to the offerer, is no binding acceptance.

In Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256, Bowen LJ said,

One cannot doubt that, as an ordinary rule of law, an acceptance of an offer made ought to be notified to the person who makes the offer, in order that the two minds may come together. Unless this is done the two minds may be apart, and there is not that consensus which is necessary according to the English law - I say nothing about the laws of other countries - to make a contract.

In Balfour v Balfour [7] [1919] 2 KB 571, Atkin LJ said,

Agreement between the parties must such that they have an intention to enter into contract having consensus ad idem i.e. meeting of mind should be there and it should be in the same sense while entering into contract.

In Baltimore & Ohio R. Co. v. United States (1923) [8] the US Supreme Court said an implied in fact contract is,

an agreement ... founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding.

The reasoning is that a party should not be held to a contract that they were not even aware existed. [7] A mutual promise between friends over simple personal matters should not be a situation where legal remedies are to be used. Equally, any such agreement where the obligation is primarily a moral one rather than a legal one should not be enforceable. It is only when all parties involved are aware of the formation of a legal obligation is there a meeting of the minds.[ citation needed ]

However, the awareness of a legal obligation is established, not through each party's subjective understanding of the terms, but on "objective indicators," based on what each party said and did. [9] [10]

Under the formalist theory of contract, every contract must have six elements: offer, acceptance, consideration, meeting of the minds, capacity and legality. Many other contracts, but not all types of contracts, also must be in writing and be signed by the responsible party, in an element called form. [ citation needed ]

Mutual assent is vitiated by actions such as fraud, undue influence, duress (see per minas), mutual mistake, or misrepresentation.[ citation needed ] This may render a contract void or unenforceable.

See also

Notes

  1. ↑ R. Austen-Baker, 'Gilmore and the Strange Case of the Failure of Contract to Die After All' (2002) 18 Journal of Contract Law 1
  2. ↑ e.g. Lord Steyn, 'Contract Law: Fulfilling the Reasonable Expectations of Honest Men' (1997) 113 LQR 433; c.f. § 133 BGB in Germany, where "the actual will of the contracting party, not the literal sense of words, is to be determined"
  3. ↑ Friedrich Carl von Savigny, System des heutigen Römischen Rechts , 8 vols. (Berlin: Veit, 1840–9) online, in German
  4. ↑ Oliver Wendell Holmes Jr., 'The Path of the Law' (1897) 10 Harvard Law Review 457
  5. ↑ R. Austen-Baker, 'Gilmore and the Strange Case of the Failure of Contract to Die After All' (2002) 18 Journal of Contract Law 1.
  6. ↑ Thesiger LJ then refers to Adams v. Lindsell as supporting this proposition.
  7. 1 2 Bhoomika CB (2021-05-13). "Balfour vs Balfour Case Summary (1919)". Law Planet. Retrieved 2021-07-06.
  8. ↑ 261 U.S. 592, 597, 58 Ct.Cl. 709, 43 S.Ct. 425, 67 L.Ed. 816 (1923).
  9. ↑ "Texas contract law". Gaddy Wells. Archived from the original on 2 February 2009. Retrieved 2022-03-25.
  10. ↑ "Ward v. Williams, Court of Appeals of Arkansas". Archived from the original on 2011-07-21.

Related Research Articles

<i>Raffles v Wichelhaus</i> Case of mutual mistake in English contract law

Raffles v Wichelhaus [1864] EWHC Exch J19, often called "The Peerless" case, is a leading case on mutual mistake in English contract law. The case established that where there is latent ambiguity as to an essential element of the contract, the Court will attempt to find a reasonable interpretation from the context of the agreement before it will void it.

<span class="mw-page-title-main">Estoppel in English law</span>

Estoppel in English law is a doctrine that may be used in certain situations to prevent a person from relying upon certain rights, or upon a set of facts which is different from an earlier set of facts.

<span class="mw-page-title-main">Offer and acceptance</span> Two components of agreement

Offer and acceptance are generally recognized as essential requirements for the formation of a contract. Analysis of their operation is a traditional approach in contract law. This classical approach to contract formation has been modified by developments in the law of estoppel, misleading conduct, misrepresentation, unjust enrichment, and power of acceptance.

<span class="mw-page-title-main">Mistake (contract law)</span> Concept in contract law

In contract law, a mistake is an erroneous belief, at contracting, that certain facts are true. It can be argued as a defense, and if raised successfully, can lead to the agreement in question being found void ab initio or voidable, or alternatively, an equitable remedy may be provided by the courts. Common law has identified three different types of mistake in contract: the 'unilateral mistake', the 'mutual mistake', and the 'common mistake'. The distinction between the 'common mistake' and the 'mutual mistake' is important.

<i>Balfour v Balfour</i> 1919 English contract law case

Balfour v Balfour [1919] 2 KB 571 is a leading English contract law case. It held that there is a rebuttable presumption against an intention to create a legally enforceable agreement when the agreement is domestic in nature.

<i>Smith v Hughes</i> English contract law case

Smith v Hughes (1871) LR 6 QB 597 is an English contract law case. In it, Blackburn J set out his classic statement of the objective interpretation of people's conduct when entering into a contract. The case regarded a mistake made by Mr. Hughes, a horse trainer, who bought a quantity of oats that were the same as a sample he had been shown. However, Hughes had misidentified the kind of oats: his horse could not eat them, and he refused to pay for them. Smith, the oat supplier, sued for Hughes to complete the sale as agreed. The court sided with Smith, as he provided the oats Hughes agreed to buy. That Hughes made a mistake was his own fault, as he had not been misled by Smith. Since Smith had made no fault, there was no mutual mistake, and the sale contract was still valid.

<i>Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd</i> 1977 Court of Appeal case involving contract formation and standard forms

Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1977] EWCA Civ 9 is a leading English contract law case. It concerns the problem found among some large businesses, with each side attempting to get their preferred standard form agreements to be the basis for a contract.

<i>Rose & Frank Co v JR Crompton & Bros Ltd</i>

Rose & Frank Co v JR Crompton & Bros Ltd [1924] is a leading decision on English contract law, regarding the intention to create legal relations in commercial arrangements. In the Court of Appeal, Atkin LJ delivered an important dissenting judgment which was upheld by the House of Lords.

<i>Nethermere (St Neots) Ltd v Gardiner</i> United Kingdom employment law court case

Nethermere Ltd v Gardiner And Another [1984] ICR 612 is a UK labour law case in the Court of Appeal in the field of home work and vulnerable workers. Many labour and employment rights, such as unfair dismissal, in Britain depend on one's status as an "employee" rather than being "self-employed", or some other "worker". This case stands for the proposition that where "mutuality of obligation" between employers and casual or temporary workers exists to offer work and accept it, the court will find that the applicant has a "contract of employment" and is therefore an employee.

<span class="mw-page-title-main">English contract law</span> Law of contracts in England and Wales

English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the Industrial Revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.

<i>Gibson v Manchester City Council</i>

Gibson v Manchester City Council[1979] UKHL 6 is an English contract law case in which the House of Lords strongly reasserted that agreement only exists when there is a clear offer mirrored by a clear acceptance.

<span class="mw-page-title-main">Agreement in English law</span>

In English contract law, an agreement establishes the first stage in the existence of a contract. The three main elements of contractual formation are whether there is (1) offer and acceptance (agreement) (2) consideration (3) an intention to be legally bound.

<span class="mw-page-title-main">Contract</span> Legally binding document establishing rights and duties between parties

A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of those at a future date. The activities and intentions of the parties entering into a contract may be referred to as contracting. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or equitable remedies such as specific performance or rescission. A binding agreement between actors in international law is known as a treaty.

<i>R v Clarke</i> Judgement of the High Court of Australia

R v Clarke, is court case decided by the High Court of Australia in the law of contract.

<span class="mw-page-title-main">Indian Contract Act, 1872</span> Contract Act

The Indian Contract Act, 1872 prescribes the law relating to contracts in India and is the key act regulating Indian contract law. The Act is based on the principles of English Common Law. It is applicable to all the states of India. It determines the circumstances in which promises made by the parties to a contract shall be legally binding. Under Section 2(h), the Indian Contract Act defines a contract as an agreement enforceable by Law.

<span class="mw-page-title-main">United States contract law</span>

Contract law regulates the obligations established by agreement, whether express or implied, between private parties in the United States. The law of contracts varies from state to state; there is nationwide federal contract law in certain areas, such as contracts entered into pursuant to Federal Reclamation Law.

The Household Fire and Carriage Accident Insurance Company (Limited) v Grant (1878–79) LR 4 Ex D 216 is an English contract law case concerning the "postal rule". It contains an important dissenting judgment by Bramwell LJ, who wished to dispose of it.

Intention to create legal relations, otherwise an "intention to be legally bound", is a doctrine used in contract law, particularly English contract law and related common law jurisdictions.

<i>Merritt v Merritt</i> 1970 English contract law case

Merritt v Merritt [1970] EWCA Civ 6 is an English contract law case, on the matter of creating legal relations. While under the principles laid out in Balfour v Balfour, domestic agreements between spouses are rarely legally enforceable, this principle was rebutted where two spouses who formed an agreement over their matrimonial home were not on good terms.

<i>Dickinson v Dodds</i>

Dickinson v Dodds (1876) 2 Ch D 463 is an English contract law case heard by the Court of Appeal, Chancery Division, which held that notification by a third party of an offer's withdrawal is effective just like a withdrawal by the person who made an offer. The significance of this case to many students of contract law is that a promise to keep an offer open is itself a contract which must have some consideration.

References

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.