Law 5110 Study Guide - Quiz Guide: Meeting Of The Minds, Quid Pro Quo, Matrimonial Regime
The intention to create legally binding relations
A legally binding contract must ensure that the agreement of the parties consists of an offer and a
corresponding acceptance.
They do not only need to agree on the same thing (consensus ad idem), but they also need to
agree that what they agree upon is binding in law.
Dissensus
It is not always clear what the intention of the parties is when making a contract. The problem of
dissensus is treated differently in different jurisdictions.
The approach is to look for an objective meaning of the used words rather than to try to discover
what the real intention of the parties was.
FR: any dissensus is regarded as standing in the way of the valid formation of a contract. (art.
1101 and 1108). If the other party could reasonably believe the first party intended to say what it
did, the latter is to compensate the other party for damages on basis of tort (art. 1382). A party’s
reasonable reliance is protected by way of damages claim (§122BGB)
GR: they regard a mistake in the declaration as a ground to avoid the contract on basis of
§119BGB.
NL: art 3:35BW provides a third alternative by prohibiting a party from invoking the discrepancy
between intention and declaration against someone who could reasonably rely on this party’s
declaration.
ENG: the absence of a meeting of the minds prevents the contract from coming into being, but
whether or not there is a meeting of the minds is assessed objectively: reasonable reliance on a
party’s declaration will bring the contract about.
Courts apply the objective approach by looking at factors such as:
1. How easy it is for the addressee to investigate whether the declaration was really intended
to mean what it says.
2. Whether the transaction would be beneficial for one of the parties.
3. What is customary in a certain branch or location.
4. The meaning of a disputed term in everyday speech.
5. The place of contracting
6. The expertise and experience of the parties.
The effect of the objective approach to agreement is that the party who justifiably relies on the
contents of the other party’s unintended declaration can claim that the contract has come into
being.
Erreur-obstacle literally expresses that the mistake a party has made prevents the meeting of the
minds.
Commercial agreements
Parties to commercial contracts are assumed to have the intention of being legally bound. This
assumption exists in all jurisdictions, but is perhaps the strongest in English law in which there is
even a legal presumption that a commercial agreement is legally binding.
The main exception is when parties explicitly say they do not intend to be bound.
They can do so through:
1. Make their negotiations subject to contract
2. Honour clause/gentleman’s agreement
Gratuitous and disadvantageous transactions
1. The first type of a gratuitous transaction is the promise to make a gift (donation). This is
usually viewed with so much suspicion that most civil law jurisdictions require this
promise to be put in the form of a notarial deed.
Under English law, gratuitous promises are equally unenforceable for the reason they
don’t have consideration. Consideration requires that there is a quid pro quo (“something
for something”). English law requires the donative promise to be put in a deed. The law’s
suspicion is hereby counterbalanced by the formality.
2. Disadvantageous transactions. A promise need not to be purely gratuitous for it to raise
suspicions about the earnestness of the intention. Neither English law or civil law
requires these disadvantageous transactions to be put in any particular form. As these
transactions aren’t very beneficial to the promisor, there must be clear evidence that he
was really willing to commit himself beyond the boundaries of the ordinary.
3. Social agreements. Such an agreement is not assumed to be legally binding, unless clear
and unequivocal evidence exists for the contrary.
4. Domestic agreements. Most legal systems assume that people in one household are not
legally bound to their promises unless the contrary is proved.
Prenups: in most civil law systems they are a matter of routine and usually come with the
matrimonial regime. In the UK prenuptial agreements have long not been enforceable.
Consideration and causa
Art 2:101(1) PECL:
A contract is concluded if:
1. The parties intend to be legally bound, and
2. They reach a sufficient agreement without any further requirement.
In English law, an agreement also needs consideration. In French based legal systems, they
require to have causa.
Consideration in English law
English law requires that an agreement is supported by consideration. This means that each party
to the agreement must give, do or promise something in return. The consideration is the thing,
service or promise that is given in return.
In cases where there is only an exchange of promises to perform acts in the future there is an
executory consideration. Executed consideration exists when a promise is made in exchange for
an act and the act is performed.
Consideration must move from the promisee, a party to whom a promise was made can only
enforce that promise if that same party provided the consideration for it. (Barber v Fox, 1682)
and (Thomas v Thomas, 1842).
Consideration need not move to the promisor, if the promise confers a benefit on a third party,
this may constitute valid consideration. (e.g. payments made by credit cards).
4 main principles of consideration:
1. Consideration must be sufficient but it need not be adequate. (Chappell v Nestle, 1959)
Document Summary
A legally binding contract must ensure that the agreement of the parties consists of an offer and a corresponding acceptance. They do not only need to agree on the same thing (consensus ad idem), but they also need to agree that what they agree upon is binding in law. It is not always clear what the intention of the parties is when making a contract. The problem of dissensus is treated differently in different jurisdictions. The approach is to look for an objective meaning of the used words rather than to try to discover what the real intention of the parties was. Fr: any dissensus is regarded as standing in the way of the valid formation of a contract. (art. If the other party could reasonably believe the first party intended to say what it did, the latter is to compensate the other party for damages on basis of tort (art.
