Question

3. Intent to enter into a contract is important in the con­tract’s formation. Intent is determined by the objective theory of contracts. That is, it is judged by outward, ob­jective facts as they would be interpreted by a reasonable person, rather than by the party’s own secret, subjec­tive in­tentions. Summarize your understanding the objective theory, and identifying facts and circumstances that should be considered by the court when enforcing the contract, in determining what are the terms of the contract? Do you agree that with the goal of adding stability and predictability to society’s actions that an objective theory is the only possible method to determine what the parties intended. What would happen if the person’s subjective belief were allowed to control the interpretation of the enforcement process?

Answer 1

Objective theory of contract is based on the objective facts, these objective facts consist of following

1. What both the parties have agreed and said during the contract formation or entering in the contract?
2. How both the parties have appeared and acted, and it should be entered with objective preview
3. It also consists of the circumstances which are surrounding when the transaction is taking place.

A contract will be considered valid only if following criteria has been met

1. One party has offered and other has accepted the same.
2. Consideration if any has to be mutually bargained and accepted with legal binding
3. Party who has offered and party who has accepted both should have legal identity to offer and accept the contract terms.
4. Goal of contract should be under legal boundary and it should not be against any public policy

Yes, I agree that goal of adding stability and predictability to society’s actions that an objective theory is the only possible method to determine what the parties intended, because as we have discussed earlier objective theory of contract has circumstances surrounding the transaction as an integral part.

if the person’s subjective belief were allowed to control the interpretation of the enforcement process then would not serve the purpose for which the contract has been entered and it would be void.