Contract Law - Lecture 3 Approaches to analysing contractual agreements What is an agreement " All contracts are agreements. " Not all agreements are contracts. " Contractual agreement usually 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 (e.g. agreement on the same thing) - is required, courts look to find this (what was actually agreed) 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 Tamplin v James [1880] 15 ChD 215 " Defendant attended an auction to buy an inn which was put on sale as 'Lot 1'. " The auctioneer explained the particulars of sale and the plan, which showed the extent of the property. " 'Lot 1' was not sold at the auction eventually. " Immediately after the auction, the defendant made an offer for the property, which was accepted. " Later, it turned out that the defendant made the offer under the mistaken belief that 'Lot 1' included two adjacent plots of land - on this assumption " Defendant then refused to go ahead with the contract after finding out it wasn't two plots of land " Defendants argument was he grew up thinking the two adjacent lots came with the inn, however this wasn't the case " The court held that the defendant was bound by his contract to buy 'Lot 1', and he was not entitled to the adjacent plots. - didn't entertain the defendants subjective view The Court's approach " The courts adopt an objective approach. " VTB Capital Plc v Nutritek Int'l Corpn [2013] UKSC 5, per Lord Neuberger- Objectivity is one of the most fundamental principles on which contractual liabilities and rights are based. - what a reasonable person would have understood the contract to be " Emphasis is placed on the outward impression and not on the subjective meaning. The Hannah Blumenthal [1983] 1 AC 854- The H of L refused to condone a purely subjective approach and held that it was necessary for the buyers and sellers to so conduct themselves as to enable an assumption that the contract was to be abandoned
" The question for the courts is what the reasonable person would have concluded from the facts and events. " Should it be the reasonable person in the shoes of the party making the observation? This can pose huge problems. " Example, the reasonable person from the view of the observing party may have peculiar knowledge, should that count? Or should it be the view of the detached reasonable person? Example Types of Objectivity " Promisee objectivity: Here, the reasonable person stands in the shoes of the person in the situation accepting the offer and views the events from that perspective. " Promisor objectivity: Here, the reasonable person stands in the shoes of the person who makes the promise and