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What Is a Subjective Theory of Contract

Posted 8. Dezember 2022 by Logistik-Express in Allgemein

More recently, this has been described as “the basic knowledge reasonably available to the parties in the situation in which they found themselves at the time of the conclusion of the contract” (Rainy Sky v. Kookmin Bank). It seems easier to identify what knowledge is reasonably available to the parties than to determine what makes economic sense, which I reviewed in February. This legal concept has become the standard for determining the will of the parties in an agreement since the late 19th century. Objective contract theory replaces the previous norm, known as subjective treaty theory or “meeting of heads” that was commonly applied in the early 1800s. Therefore, the main determinant of the validity of a contract lies in the external actions or performance of the parties, and not in the internal state of mind or intention of the parties that exists at the time of the conclusion of an agreement. But even these scholars, known as “subjectivists,” recognize that by the late nineteenth century, the other side, the “objectivists,” had gained the upper hand, and objective theory is the widely accepted theory. Subjective approach Contract law refers to a legal doctrine that considers a contract concluded on the basis of a subjective combination of spirits to be legally binding. It requires the court to consider the mental state of a contracting party when determining whether a contract is legally enforceable. If an objective approach is used, the court will look at the case from the perspective of a rational person. While many legal experts reject the subjective approach, some believe it should play a more important role in contract law. If two parties reach an agreement through a clear and obvious “leaders` meeting” and also take external actions showing their intention to reach an agreement, the contract could be considered binding. However, both theories could also be used if a party argued that there was no real intention to reach an agreement.

It would depend on whether a “reasonable person” would believe that both parties were working in good faith on the agreement, or whether the agreement was too good to be true and to the obvious advantage of one of the parties. “The contractual intentions of reckless parties should be respected and their transactions should not be corrected by reference to what they intended or could have done if they had been less negligent.” The fifth point is interesting because it suggests a subjective approach. Justice Hildyard acknowledged this point, noting that it was mentioned in Lewison on The Interpretation of Contracts 7th edition, where it was stated that: From a legal perspective, intent can be defined as the state of mind of a person when performing an act or behaving in a particular manner. This is the purpose or reason for a sequence of activities that the person wants to follow. Under contract law, a contract is only legally enforceable if the parties demonstrate their willingness to be legally bound. The fact is that it is not so easy to determine what is reasonably available, because the reality is that there is now a huge amount of information accessible on the Internet, all of which is reasonably available. So, are parties supposed to know all this information or use Internet search engines to search for every piece of potentially relevant information? It is not necessary to have a subjective meeting of minds to make a contract legally enforceable. The court assesses the whole situation and tries to determine whether it is reasonable to attribute such an intention to the parties. In the event that the requirements of the contractual intent review are not met, the court will assume that the party concerned did not intend to enter into a legally enforceable contract. There may be a discrepancy between a party`s objective intention and its subjective intention.

However, the problem with the subjective approach to contract law is that it can force the court to consider data that may not be accurate or reliable and attach unnecessary importance to it. This can undermine the court`s ability to deliver justice. On the other hand, if a party`s subjective intent is supported by valid and reliable evidence, it can improve justice. Determining the exact factual matrix is not as simple as it seems. In Chartbrook v. Persimmon Homes, Lord Justice Hoffmann stated that “there are no conceptual limits to what can be considered context” before deciding that pre-contractual discussions were excluded from the permissible factual context.

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