Subjective Objective Examines the mind of the party Examines external factors Considers party's intention Considers the reasonable intention Evaluates party's understanding Evaluates reasonable view · Parties can forget their true intentions. . Parties can present versions of events which is favourable to them at the time of dispute. · Intentions are difficult to decipher accurately. . It is easier to adopt an objective approach and make judgments based on what was said and done. Storer v Manchester City Council [1974] 1 WLR 1403 or 3 All ER 824 Per Lord Denning In contracts, you do not look into the actual intent in a man's mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a contract. A man cannot get out of a contract by saying: 'I did not intend to contract', if by his words he has done so. RTS Flexible Systems Ltd v Molkerei Alois Muller [2010] UKSC 14 Per Lord Clarke Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct ... . It is about appearance of an agreement. . Otherwise, there would always be the risk that a party meant something different from what was said and done. · The objective approach enhances certainty and reliance. . But, are there implications for the notion of consensus ad idem, if subjective intentions are not considered? There are situations where the courts will consider a party's subjective view as well, examples · Mistake · Misrepresentation A mistake occurs when a party's subjective view of the agreement does not match the objective approach. A misrepresentation is a mistake that was induced by something said or done by the other party. . Contracts usually exist in the commercial world. . The rules of contract law can have broad economic influence. · Economic efficiency and consequences are relevant. · Prices, transaction costs, risk allocation etc. are affected by contract law.
. Notions of social and political theory can also be relevant in analysing contracts and contract law. . Example, the ideology of 'Freedom of contract'. . There are ideologies that might underpin the courts' analysis and decisions on contractual issues. . Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401 . Gibson v Manchester City Council [1979] 1 All ER 972 . Storer v Manchester City Council [1974] 3 All ER 824