1. What Is the Subjective Approach to Contact Law?
2. Understanding Intent in Contract Law
3. Subjective and Objective Intent Under Contract Law
4. Implications of the Subjective Approach

Subjective approach contract law refers to a legal doctrine that regards a contract formed on the basis of a subjective meeting of minds as legally binding. It requires the court to consider a contracting party's state of mind when determining whether a contract is legally enforceable. If an objective approach is used, the court will look at the case from the point of view of a rational person. While many legal experts reject the subjective approach, there are some who believe it should play a more important role in contract law.

What Is the Subjective Approach to Contact Law?

The subjective approach to contract law refers to a legal theory that defines a contract as an agreement in which there is a subjective meeting of the minds between the parties involved. When using this approach, the court will look at the subjective expectations and anticipations of the parties and ignore the contract's objective language. However, some courts and commentators have rejected this theory, preferring the objective approach instead.

Understanding Intent in Contract Law

From a legal perspective, intent can be defined as an individual's state of mind when performing an act or behaving in a certain manner. It is the aim or reason of a sequence of activities that the person wishes to follow. According to contract law, a contract is only legally enforceable if the parties show an intention to be legally bound.

In addition, a party must express his or her intention through unambiguous words or actions. The other party should understand the words or actions as the former party had intended for him or her to. However, this is not always the case. Sometimes, there may be miscommunication resulting from certain factors, such as:

  • Wrong selection of words or actions.
  • Misunderstood or differently comprehended materialization of intent.
  • Intentional concealment of secrets.

Improper communication can lead to a conflict regarding the validity of a contract and its terms. There are many legal cases where parties agree to follow a course of action, but they had no intention to enter into a legally binding agreement with each other. Contract law seeks to distinguish contracts with an intention to create a legal relationship from those that do not.

Subjective and Objective Intent Under Contract Law

To determine whether parties to a contract have the intention to start a legal relationship, the court uses the test of contractual intent. Such a test is objective and not subjective in nature. It uses an objective approach to validate the contract's enforceability.

The court disregards a party's subjective intent, which is his or her actual state of mind, and focuses more on objective intent, which is the intention of a rational person under the same circumstances. It does not interfere in a person's personal mental sphere but looks at the situation from a reasonable person's point of view.

It is not necessary to have a subjective meeting of the minds to make a contract legally enforceable. The court evaluates the entire situation and attempts to find out whether it will be rational to ascribe such an intention to the parties. In the event the requirements of the contractual test of intent are not met, the court will assume the party under consideration did not have the intention to enter into a legally enforceable contract. A disparity may exist between a party's objective intent and his or her subjective intent.

Implications of the Subjective Approach

Some legal experts believe the subjective approach to contract law should be given more importance. This is because limiting the creation of contracts to objective intent alone may unduly restrict the formation of contracts. This approach, however, has its positive and negative implications.

If subjectivity of intent plays a more significant role in determining the enforceability of a contract, it will broaden the scope of contracts being created and not limit them to being formed based on objective intent only. As such, it can facilitate the creation of genuine contracts.

Nonetheless, the problem with the subjective approach to contract law is that it may require the court to consider and give unnecessary importance to data that may not be accurate or reliable. This can undermine the court's ability to deliver justice. Then again, if a party's subjective intent is backed by valid and trustworthy evidence, it can enhance the justice delivered.

If you need help understanding the subjective approach to contract law, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.