Consensus Ad Idem in Contract Law: What You Need to Know
Consensus ad idem means agreement in Latin and in contract law, it means that there has been a meeting of the minds of all parties involved.3 min read
2. No Consensus Ad Idem Equals No Contract
3. Establishing a Meeting of the Minds
4. Breach of Contract
5. Example of Not Reaching Consensus Ad Idem
6. The Uncertainty of Consensus Ad Idem
Consensus ad idem in contract law means there has been a meeting of the minds of all parties involved and everyone involved has accepted the offered contractual obligations of each party. Consensus ad idem is a Latin term that means, simply, agreement. This is the first principle that's the foundation of enforceable contracts because for contracts to be enforceable, agreement or a meeting of the minds of all involved parties, is required.
Complete and Not Based on Potential Future Agreements
The second and third things contracts need to be enforceable are they must be complete and not based on a plan to renegotiate at some point in the future. To be complete, all the essential terms of the contract must be included and understood. A contract is promissory in nature, but it can't be built on the idea that it's conditional based on a potential future agreement. The basics required to enter into an enforceable contract include:
- Some form of consideration to be exchanged
- An offer
- An acceptance of the offer
No Consensus Ad Idem Equals No Contract
A meeting of the minds, or agreement, is a required element in order for a contract to be enforceable. So, all terms of the offer must be accepted or there is no consensus ad idem and there is, because of that, no contract. If there is an obvious vagueness or uncertainty in the contract's terms, it isn't possible to get an objective agreement. Sometimes, a contract may appear to be valid, but it's actually the result of an error by one party or even both parties. The mistakes can rest in the contract's terms or the nature of the contract's subject matter.
Establishing a Meeting of the Minds
Consensus ad idem isn't established by a lone clause in a contract. Examining the full scope of the agreement to find out whether the parties each fully understand enough about the contract for a court to enforce it is how a meeting of the minds is established, or proven not to exist in some cases. Each investigation of contract terms and understanding is unique to its contract. No single test decides whether both parties understood the terms of the contract when making the agreement.
Breach of Contract
When it's suggested that there's been a breach of contract, the alleged breaching party might claim there never was a contract by suggesting there was no certainty or meeting of the minds about the contract's subject and terms. This can happen because sometimes contracts lack precision. This is done to allow room for flexibility in the business dealings. This leaves the court in the position of examining other dealings between the parties involved in the contract to figure out what each party's intentions were when entering into the contract.
Example of Not Reaching Consensus Ad Idem
One easy example of two parties agreeing to a contract but not having a meeting of the minds is when terminology gets mixed up between the parties. The buying party contacts the selling party with a request to buy the seller's stock, with the intention of buying the stock that's on hand. The selling party thinks the buyer is asking to buy the entire business and says yes. Both parties appear to be agreeing to the deal, but there is no true meeting of the minds because the terminology used, while accurate for both parties, does not mean the same thing to each party.
The Uncertainty of Consensus Ad Idem
One basic flaw in the way contracts are legally constructed is that it's never completely possible to prove, with absolute certainty, that the involved parties had a true meeting of the minds. A systematic approach is typically the best way of dealing with this in order to determine each party's intentions in comparison to the terms of the contract when there is a disagreement. The filter applied is how the terms and intentions were expressed in both actions and words, as a reasonable person would understand them.
In practical terms, the court has to use a body of precedent and theory when deciding the fairest way to evaluate and assign the intentions and details of any contract being evaluated.
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