Consensus ad idem

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Contract Law

'Meeting of minds'. For a contract to be useful the parties must be in agreement about its provisions. In the event of a possible breach of contract, the party alleged to be in breach may wish to claim that the contract did not exist at all, as there was no certainty about the subject of the contract. However, many contracts are not very precise, to allow flexibility in business dealings, and a court may have to examine other dealings between the contracting parties to determine what their true intentions were.

It is not desirable, on the whole, to insist that all contracts are perfectly precise; this would make it difficult to do business. However, as a general rule, if a contract leaves something to be determined in the future, the determination itself must not require the agreement of the parties.

Here are some examples.

  • In see: Nicolene v simmons (1953) the Court of Appeal refused to rule that a meaningless clause in a contract rendered the whole contract invalid; otherwise, it was argued, anyone who wished to renege on a contract could seek out a meaningless statement somewhere in the text.
  • In see: May and butcher jr (1934) a contract that stipulated that an arbitrator would be employed to settle disagreements (a common enough practise) was ruled invalid because the contract did not say what exactly the abitrator would be called on to decide.
  • In see: Scammel v ouston (1941) the contract was struck down because the court was unable to discern any actual details in the vague language used by the contracting parties.
  • In see: Hillas v arcos (1932) the court ruled that the term 'fair specification' in a contract was valid, as the companies had done business frequently before and would have known each other's requirements and terms.