Mutual assent

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The mutual assent is the agreement of the parties to the conditions specified in the contract. This is one of the most important parts of the contract. The contracting parties must voluntarily and genuinely agree to the terms of the contract. If they do not, the contract may be invalid. Mutual assent is known as ‘the meeting of the minds’. This concept means that:

  • all parties understand the basis of the contract they have concluded
  • they were open and honest with each other
  • there are no hidden terms or meanings

Communication and acceptance on offer is an essential element of the contract because it contributes to an agreement between the parties. The essence of mutual assent is whether the parties of the contract understand the contract the same way. The terms of the contract must be clearly defined in order to objectively conclude that the contract has been carried out (P. Tepper, p. 101). Mutual agreement is reached through negotiations. They are analyzed in the acceptance process and contract context. However, the negotiation process is not a contract in itself. The law may determine when negotiations have been concluded and the parties have either reached agreement or not. This happens through the rules of offer and acceptance (B. C. Scheible, p. 8). The contract has been concluded if mutual assent has been combined with consideration (B. C. Scheible, p. 9).

Basic rule of contract law

"Meeting of the minds" is a basic rule of contract law. This means that the parties to the contract must agree to its terms. In this case the court checks if there is mutual agreement. He examines the words and actions of the parties and looks for evidence that the parties act in the manner in which they have concluded the contract. If the behavior of the parties suggests there is any controversy, then the court enforces an agreement (J.L.Grama, p. 321).

Mutual assent problem

The problem of mutual assent arises when:

  • the parties are not honest
  • the parties commit various mistakes in contractual negotiations
  • the terms of the contract are intentionally omitted
  • the parties will be subjected to excessive pressure

If these problems occur, mutual assent documents do not exist and the contract is not concluded (P. Tepper, p. 101).

Defects occurring in the mutual assent process

The defects that may occur in the process of mutual assent are (J. Sweet, M. M. Schneier, p. 39-40):

  • Fraud and misrepresentation - It often happens that the negotiation process is made up of promises and factual statements made by each party. If such action is taken to deceive the other party, then the other party may cancel the transaction or receive compensation.
  • Economic Duress - Mutual assent cannot be obtained by duress. In the commercial, modern world, duress relies most often on economic or business duress.
  • Mistake - There may usually be errors in the terms of the contract, because, for example, one of the parties may not read the contract or because of an error the contract may not reflect the prior understanding of the parties. It also often happens that the parties are wrong about the basic assumptions of the contract.
  • Unconscionability - In the lack of clarity, the Uniform Commercial Code gives the judge the right to remove part or even the entire contract of sale of goods, which was not enforceable.
  • Formation defects and restitution - Restitution claims are usually made where the parties were to conclude a contract, but for some reason they did not.

Examples of Mutual assent

  • A real estate sale: In a real estate sale, the seller and buyer must both agree to the terms of the sale. This includes the price, closing date, any conditions, and other details of the sale.
  • A job offer: When an employer offers a job to a potential employee, both parties must agree to the terms of the job. This includes the salary, job duties, benefits, and other aspects of the job.
  • A business partnership: When two parties enter into a business partnership, they must both agree to the terms of the partnership. This includes the ownership structure, profit-sharing arrangements, and other key details of the partnership.

Advantages of Mutual assent

Mutual assent is an important part of any contract, as it ensures that all parties involved are in agreement with the terms of the agreement. There are several advantages to mutual assent, including:

  • Clarity: Mutual assent helps to clarify the terms of the agreement, so that all parties understand what they are agreeing to.
  • Legality: By establishing mutual assent, all parties involved are legally bound to follow the terms of the contract.
  • Protection: Mutual assent helps to protect the interests of all parties involved, by ensuring that all parties agree to the same terms.
  • Certainty: Mutual assent helps to provide certainty, as all parties are aware of the terms of the contract and can therefore rely on them.
  • Fairness: Mutual assent ensures that all parties are treated fairly, as all parties are aware of the terms of the agreement and can agree to them.

Limitations of Mutual assent

The mutual assent is a fundamental element of contract law, but it is not without its limitations. The following are some of the limitations of mutual assent:

  • The parties must have capacity to enter into the contract. This means that they must have the legal capacity to understand the terms of the agreement and to be bound by it.
  • The parties must have a genuine agreement on the material terms of the contract. If one of the parties does not understand or agree to the terms, the agreement will not be considered valid.
  • The parties must be free from any form of duress or coercion. This means that the parties must have entered into the agreement of their own free will and without any outside influence.
  • The parties must have full disclosure of all material facts. If the parties do not have full knowledge of the facts, the agreement may be invalid.
  • The agreement must be lawful. This means that the agreement must not violate any laws or public policy.
  • The agreement must be in writing. In some cases, oral agreements may be legally binding, but it is always best to have a written agreement to make sure that there is no confusion about the terms of the contract.

Other approaches related to Mutual assent

  • Offer and Acceptance: This is the basis of the contract, where one party makes an offer to another, which is then accepted. The offer must be definite, definite terms must be included in the offer, and the offer must be communicated to the other party.
  • Consideration: This refers to the exchange of something of value between the parties. It can be money, goods, services, or a promise to do something. The parties must both have something of value to exchange for the contract to be valid.
  • Capacity: This means that the parties must have the legal capacity to enter into a contract. This means that they must be of legal age and of sound mind when they enter into the contract.
  • Legality: This refers to the legality of the contract and the subject matter of the contract. The contract must be legal and not involve anything that is illegal or against public policy.

In summary, mutual assent is an essential element of a valid contract and includes offer and acceptance, consideration, capacity, and legality. All of these elements must be present for the contract to be valid.


Mutual assent — recommended articles
Constructive fraud — Objective theory of contract — Executory consideration — Binding contract — Consideration clause — Mutual agreement — Contractual relationship — Executed agreement — Executed consideration

References

Author: Anna Jędrzejczyk

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