Contract Topic 3: Agreement (Consensus)

Front 1

A more formal definition of contract.

Back 1

A contract is an agreement, between two parties having the capacity to make it, in the form demanded by law, to perform on one side or both, acts which are not trifling, indeterminate, impossible or illegal, creating an obligation enforceable in the court of law.

Front 2

Pactum or paction...

Back 2

"Is the consent of two or more parties, to some things to be performed by either of them; for it is not a consent in their opinions, but in their wills, to oblige any of them" - Stair

Front 3

Consensus in idem

Back 3

Agreement on the same thing - often referred to as "a meeting of minds."

As far as the law is concerned, all contracts are created when an offer is accepted, often but not always the offer will be preceded by a preliminary step known as an invitation to treat.

Front 4

Key point of consensus in idem

Back 4

When an offer is accepted by an unqualified acceptance, a binding contract is created.

Front 5

1. Offeror

2. Offeree

3. Acceptor

Back 5

1. Person making the offer

2. To whom the offer is made

3. Person accepting the offer

Front 6

Criticism of the agreement model

Back 6

May be criticised for being highly artificial and whilst as a model it works well for some transactions but it is rather artificial when applied to simple purchases of train tickets or newspaper.

Secondly, the consensus in idem model.may be criticised because of the difficulty in establishing whether or not there really has been a "meeting of minds". The solution to this problem is the objective approach.

Front 7

Where there is no consensus in idem, then there is no contract; **Mathieson Gee (Ayrshire) v Quigley

Back 7

Mathieson offered to supply equipment necessary for the removal of silt but Quigley thought the offer was to remove the silt from his pond and accepted.

Held: that no contract existed between the two parties due to the lack of consensus on all the essential terms - M thought it was contract of hire, Q a contract of services "no contract existed between the two parties. The respondents offered one sort of contract and the appellant accepted another kind of contract..." - per Lord Normand.

Front 8

The objective approach...

Back 8

We cannot know what is really going on in another persons mind, i.e. if there has been subjective agreement, so the law takes an objective approach to establishing if the requisite consensus in idem has been reached, i.e. the law looks to words and deeds rather than to mental intentions.

Front 9

*Muirhead & Turnbull v Dickson

Back 9

"Commercial contracts cannot be arranged by what people think in their inmost minds. Commercial contracts are made according to what people say." - per Lord President Dunedin.

Front 10

So arrangement is normally evidence by the words and/ or conduct of the parties. **Smith v Hughes...

Back 10

"If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms."

Front 11

Mistaken offers

Back 11

An offer containing mistaken terms may still bind - Moran v University College Salford.

Front 12

Verbal transactions - *Muirhead & Turnbull v Dickson.

Back 12

"Commercial contracts cannot be arranged by what people think in their innermost minds. Commercial contracts are made according to what people say." - per lord President Dunedin.