Formation of the contract
requirements for the formation of the contract
1. agreement of the parties (offer + acceptance)
2. An intention to create legal relations (+consideration in English law; + causa un French-based legal systems BUT NOT in
France)
3. Legal Capacity of the Parties
4. Formalities
★Intention to create legal relations
3 main requirements:
1. Establish what is the intention of the parties and when does it lead to a legal agreement?
➢ Intent to create a legal relationship
➢ Dissensus (different ways to look at a similar result)
➢ Subjective approach
➢ Objective approach
2. What test of earnestness is to be applied in problematic cases in which there is doubt about one party’s agreement?
3. Parties must reach a sufficient agreement (consensus ad idem or meeting of minds) → offer corresponds to acceptance
Possible exam question: https://docs.google.com/document/d/1kUI84NuSCwQEDFrpmuii-mBqFdLZj1o00tkAYB2TKs8/edit
- Has a binding contract been concluded between Mireille and Norman Steel according to French law? → intention to create
legal relations (dissensus)
- Has a binding contract been concluded between Batman and The T according to English law and, if so, what is its content? →
intention to create legal relations (dissensus)
,1. Intention to Germany France England
create legal
relations
(dissensus)
“The intention to create a legal “A meeting of intentions” “The intention of creating legal relations”
commitment”
Rule §199 BGB: contract can be avoided in Art. 1101 CC: any dissensus stands in way Smith v Hughes [1871] LR 6 QB 597
case of mistake of contract Cockburn CJ: ‘Both parties were agreed as to
§122 BGB: Damages for the other Art. 1128 CC: any dissensus stands in way the sale and purchase of this particular parcel
party in case of reasonable reliance on of contract of oats. The defendant believed the oats to be
the contract Art. 1240 CC: French law gives more weight old, and was thus induced to agree to buy them,
to the subjective intention of the parties, so if but he omitted to make their age a condition of
it can be the contract. All that can be said is, that the two
proven that the intention differed from the minds were not ad idem as to the age of the
declaration the contract is not valid. But, the oats; they certainly were ad
other party’s reasonable reliance is protected idem as to the sale and purchase of them.’
in the way that damages in tort have to be • Blackburn J: ‘If, whatever a man's real
paid intention may be, he so conducts himself that a
for losses suffered for reliance of 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.’
, → You are bound if you didnt explicitly
express the thing which hindered the meeting
od the minds (consenus ad idem) to be a
condition
Hartog v Colin & Shields (1939)
• The seller offered to sell 3,000 Argentine hare
skins at a fixed price “per pound” when he
really meant “per piece”
• There were 3 pieces per pound so he
mistakenly offered the hare skins at one-third
of his
intended price
• The buyer accepted the offer and sued for
damages when the seller refused to deliver at
that
low price
• The court found no contract because in the
context of the custom of the trade the price for
hare skins is always ’per piece’ and never ‘per
pound’.
Application Subjective approach: the mindset of Subjective approach: the mindset of the Objective test:
the parties at the time of conclusion → parties at the time of conclusion →
CONTRACT LAW IS NOT CONTRACT LAW IS NOT INTERESTED - Expertise of the manufacturer
INTERESTED IN THIS IN THIS - Reasonable person test
Objective approach: How a Objective approach: How a reasonable
, reasonable person would interpret a person would interpret a party's intention If the reasonable person test is not giving a
party's intention from his/her conduct from his/her conduct in all circumstances clear outlook, then we can take other elements:
in all circumstances Elements: ➢ How easy for the addressee to investigate
Elements: ➢ How easy for the addressee to whether the price was reasonable
➢ How easy for the addressee to investigate whether the price was ➢ Whether the transaction is beneficial to
investigate whether the price was reasonable one of the parties
reasonable ➢ Whether the transaction is beneficial to ➢ What is customary
➢ Whether the transaction is one of the parties ➢ Meaning of the disputed term in everyday
beneficial to one of the parties ➢ What is customary speech
➢ What is customary ➢ Meaning of the disputed term in ➢ Place of contracting
➢ Meaning of the disputed term in everyday speech ➢ Expertise and experiences of the parties
everyday speech ➢ Place of contracting (the intention to create legal relation)
➢ Place of contracting ➢ Expertise and experiences of the
➢ Expertise and experiences of the parties
parties ➢ Provisions regarding intention in
➢ Provisions regarding intention in different jurisdictions
different jurisdictions (“a meeting of intentions” rencontre des
(“The intention to create a legal volonté)
commitment” → Germany
Bundesgerichtshof in K
Speditionsgesellschaft 1956)
Conclusion
requirements for the formation of the contract
1. agreement of the parties (offer + acceptance)
2. An intention to create legal relations (+consideration in English law; + causa un French-based legal systems BUT NOT in
France)
3. Legal Capacity of the Parties
4. Formalities
★Intention to create legal relations
3 main requirements:
1. Establish what is the intention of the parties and when does it lead to a legal agreement?
➢ Intent to create a legal relationship
➢ Dissensus (different ways to look at a similar result)
➢ Subjective approach
➢ Objective approach
2. What test of earnestness is to be applied in problematic cases in which there is doubt about one party’s agreement?
3. Parties must reach a sufficient agreement (consensus ad idem or meeting of minds) → offer corresponds to acceptance
Possible exam question: https://docs.google.com/document/d/1kUI84NuSCwQEDFrpmuii-mBqFdLZj1o00tkAYB2TKs8/edit
- Has a binding contract been concluded between Mireille and Norman Steel according to French law? → intention to create
legal relations (dissensus)
- Has a binding contract been concluded between Batman and The T according to English law and, if so, what is its content? →
intention to create legal relations (dissensus)
,1. Intention to Germany France England
create legal
relations
(dissensus)
“The intention to create a legal “A meeting of intentions” “The intention of creating legal relations”
commitment”
Rule §199 BGB: contract can be avoided in Art. 1101 CC: any dissensus stands in way Smith v Hughes [1871] LR 6 QB 597
case of mistake of contract Cockburn CJ: ‘Both parties were agreed as to
§122 BGB: Damages for the other Art. 1128 CC: any dissensus stands in way the sale and purchase of this particular parcel
party in case of reasonable reliance on of contract of oats. The defendant believed the oats to be
the contract Art. 1240 CC: French law gives more weight old, and was thus induced to agree to buy them,
to the subjective intention of the parties, so if but he omitted to make their age a condition of
it can be the contract. All that can be said is, that the two
proven that the intention differed from the minds were not ad idem as to the age of the
declaration the contract is not valid. But, the oats; they certainly were ad
other party’s reasonable reliance is protected idem as to the sale and purchase of them.’
in the way that damages in tort have to be • Blackburn J: ‘If, whatever a man's real
paid intention may be, he so conducts himself that a
for losses suffered for reliance of 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.’
, → You are bound if you didnt explicitly
express the thing which hindered the meeting
od the minds (consenus ad idem) to be a
condition
Hartog v Colin & Shields (1939)
• The seller offered to sell 3,000 Argentine hare
skins at a fixed price “per pound” when he
really meant “per piece”
• There were 3 pieces per pound so he
mistakenly offered the hare skins at one-third
of his
intended price
• The buyer accepted the offer and sued for
damages when the seller refused to deliver at
that
low price
• The court found no contract because in the
context of the custom of the trade the price for
hare skins is always ’per piece’ and never ‘per
pound’.
Application Subjective approach: the mindset of Subjective approach: the mindset of the Objective test:
the parties at the time of conclusion → parties at the time of conclusion →
CONTRACT LAW IS NOT CONTRACT LAW IS NOT INTERESTED - Expertise of the manufacturer
INTERESTED IN THIS IN THIS - Reasonable person test
Objective approach: How a Objective approach: How a reasonable
, reasonable person would interpret a person would interpret a party's intention If the reasonable person test is not giving a
party's intention from his/her conduct from his/her conduct in all circumstances clear outlook, then we can take other elements:
in all circumstances Elements: ➢ How easy for the addressee to investigate
Elements: ➢ How easy for the addressee to whether the price was reasonable
➢ How easy for the addressee to investigate whether the price was ➢ Whether the transaction is beneficial to
investigate whether the price was reasonable one of the parties
reasonable ➢ Whether the transaction is beneficial to ➢ What is customary
➢ Whether the transaction is one of the parties ➢ Meaning of the disputed term in everyday
beneficial to one of the parties ➢ What is customary speech
➢ What is customary ➢ Meaning of the disputed term in ➢ Place of contracting
➢ Meaning of the disputed term in everyday speech ➢ Expertise and experiences of the parties
everyday speech ➢ Place of contracting (the intention to create legal relation)
➢ Place of contracting ➢ Expertise and experiences of the
➢ Expertise and experiences of the parties
parties ➢ Provisions regarding intention in
➢ Provisions regarding intention in different jurisdictions
different jurisdictions (“a meeting of intentions” rencontre des
(“The intention to create a legal volonté)
commitment” → Germany
Bundesgerichtshof in K
Speditionsgesellschaft 1956)
Conclusion
