Mutual assent

Mutual assent
See also

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, s.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, s.8). The contract has been concluded if mutual assent has been combined with consideration (B. C. Scheible, s.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, s.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, s.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, s.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.

References

Author: Anna Jędrzejczyk