Approaches to analysing contractual agreements • Agreement? • All contracts are agreements • Not all agreements are contracts • Contractual agreement requires a party to agree to do something in return for another party agreeing to do something, and vice versa • Meeting of minds- Consensus ad idem- is required • The Objective test • What was agreed? • Is there really a meeting of minds? • Is what was said/written the same as what was meant? • Example • The Courts' approach • The courts adopt an objective approach • Emphasis is placed on the outward impression and not on the subjective meaning • The Hannah Blumenthal [1983] 1 AC 854- a seller claimed that a buyer had decided to abandon their contract. The H of L refused to condone a purely subjective approach and held that it was necessary for the buyers to so conduct themselves as to entitle the sellers to assume that the contract was to be abandoned. • Courts' approach contd. • The question for the courts is what the reasonable man would have concluded from the facts and events • Should it be the reasonable man in the shoes of the party making the observation? This can pose huge problems • Example, the reasonable man from the view of the observing party may have peculiar knowledge, should that count? Or should it be the view of the detached reasonable man? Example • • Subjective/Objective views 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 · 3 types of objectivity • Promisee objectivity: Here, the reasonable man stands in the shoes of the promisee and views the events from that perspective • Promisor objectivity: Here, the reasonable man stands in the shoes of the promisor and views the events from that perspective
• Detached objectivity: Here, the reasonable man stands in a neutral position and just observes the events • Rationale for courts' approach • 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 . . Rationale contd. 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? Example • Exceptions There are situations where the courts will consider a party's subjective view, examples • Mistake • Misrepresentation A mistake could occur 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 • Example of Mistake