Mutual Assent (Overview: Legal Definition In Contract Law)

What is mutual assent?

How do you legally define it?

What are the important elements you should know!

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Understanding Mutual Assent

Mutual assent (or legal assent) is a legal term used to refer to contracting parties’ intention to enter into a contract.

To say “mutual” assent, we are referring to the fact that the intention is shared by both contract parties.

To say “assent”, we are referring to the “consent” of the parties.

Another commonly used phrase when referring to mutual assent is the “meeting of the minds”.

In other words, the two parties to a contract have reached an agreement.

Mutual assent definition

How do you define mutual assent?

According to Cornell Law School’s Legal Information Institute, mutual assent is defined as:

This short and sweet definition represents exactly what “mutual assent” means: an “agreement” between contracting parties.

In contract law, a legally binding contract is formed when there is an offer (by the offeror) and acceptance (by the offeree).

Elements of mutual assent

Mutual assent is a crucial element in contract law, particularly for the formation of contracts.

To demonstrate that a contract has been formed, you must show mutual consent or meeting of the minds.

That’s done by objectively proving the existence of an offer and acceptance of the offer.

In essence, offer and acceptance represent the two elements required to have mutual assent or an agreement between two or more parties.

An offer is when a person makes a legally binding proposal to another who is given the ability to accept it or reject it.

When the offer is accepted, a contract is legally formed.

Offer and acceptance 

Offer and acceptance represent two of the five pillars of contract formation in contract law.

Typically, for a contract to be legally formed and legally binding, it must respect the following parameters:

• There must be a consideration
• There must be an offer
• There must be an acceptance 
• The object of the contract must be legal
• The parties must have legal capacity 

As you can see, offer and acceptance represent two of the five elements required for a legally binding contract.

In other words, mutual asset (offer and acceptance) in of itself is not sufficient for a contract to be fully formed.

For example, if you have an agreement (or legal assent) to rob a bank, the contract’s object violates the law and public policy. 

As a result, the mutual assent will not lead to a legally enforceable contract.

Another example is if a contracting party is inept.

Even if all the other contract formation elements that were present, the fact that an inept person cannot legally provide consent, the contract is not valid or enforceable.

Lack of mutual assent

What happens when there is a lack of mutual assent?

Can there be a contract if there is no mutual assent or a partial one?

On the basis that mutual assent is an “agreement” between the parties, without mutual assent, you have “no agreement” between the parties.

The lack of mutual assent may be presented as a legal defense against a person’s assertion that a contract was legally formed.

In other words, if someone attempts to enforce a contract by alleging that there was mutual assent, the defendant will raise the argument of lack of mutual assent to demonstrate that there was no agreement between the parties.

Reasonable man test

For the courts to evaluate whether or not there was mutual assent between the contracting parties, they’ll generally apply an objective test called the reasonable man test or the reasonableness test.

By applying this test, the court examines the exchange of the offer and the expression of the acceptance leading to the alleged contract.

The question the court will try to answer is whether a reasonable person in the same circumstances believes that a contract was formed or not?

If the parties expressly exchange their offer and acceptance, then the evidence is clear that there’s an express contract between them.

However, if the parties orally or verbally express their mutual assent, then a contract can be legally formed as well.

In this case, a contract can be legally recognized as implied in law or as implied in fact.

An implied in law contract is when the courts declare or define legal obligations on parties although the parties may not have initially expressed consent for such a contract.

This is to avoid cases of unjust enrichment.

An implied in fact contract is a type of contract where the parties did not expressly put in writing the terms and conditions of their agreement but their actions and conduct allow the courts to imply or deduce a contract’s existence.

Mutual assent vs mutual contract 

What’s the difference between mutual assent and a mutual contract?

Mutual assent in contract law is achieved when two or more parties (individuals or entities) reach an agreement forming the basis of a legally binding contract.

The manifestation of this agreement is when the parties sign the necessary paperwork and through their conduct and behaviour start performing their legal obligations or executing what they promised.

On the other hand, a mutual contract is a type of contract where both parties are obligated towards one another.

Essentially, mutual contracts are agreements where each party receives consideration and in exchange must perform a legal obligation.

In summary, mutual assent refers to the “consent” of the parties whereas mutual contract refers to the “obligations” of the parties.

Examples 

Let’s look at a few examples of a mutual asset so we can see how it works in real-life.

Example: Service agreement

Let’s say that John owns a piece of land (real estate property) that he must maintain from time to time.

He looks around for a company that can maintain the law for him.

He finds Jerry, who owns the company Perfect Lawn Jerry Inc, specialized in lawn care, having the right tools to do the job.

Perfect Lawn Jerry Inc offers to do the job every year for a fixed price of $2,000.

John agrees to pay this price for the lawn care services.

Upon John’s acceptance of Perfect Lawn Jerry’s offer, you have mutual assent.

In other words, John and Perfect Lawn Jerry (acting through Jerry) have agreed to the terms and conditions relating to the lawn care services.

Example: Purchase of goods

Now let’s look at an example of mutual assent when purchasing goods.

Let’s say you need a new table for your dining room.

You go into a furniture store and look at different dining tables.

You choose one that is to your liking, look at the listing price and negotiate it with the salesperson.

When the salesperson gives you an additional 15% off and includes the delivery, you feel that it’s a fair price to pay and you agree to purchase the dining table for $1,000.

Upon giving your acceptance, there is mutual assent between you and the furniture store.

The mutual assent is manifested by the fact that you sign the piece of paper required to purchase the dining table and go to the counter to pay.

Lucy v. Zehmer 

Lucy v. Zehmer is a case regarding contract formation and enforceability in the common law.

It particularly deals with the enforceability of a contract implied in law.

Contracts are generally formed when there is a meeting of the minds.

However, in this case, the courts considered that a person’s mental assent was not a requisite for the formation of a contract.

In other words, both parties to a contract should have consented to or agreed to obligate themselves in a binding contract.

Under the objective theory of contract, the law can impute the intention to a person when the person’s words, actions and behaviour leads the other contracting parties to believe that there is a clear manifestation of agreement (or mutual assent).

When a person’s actions clearly manifest acceptance or an intention to be bound in a contract, the courts will give less significance to the person’s actual intention to enter into a contract or not.

Mental assent 

If there is “mental assent”, the parties have reached an agreement consciously.

There is the meeting of the minds.

However, the parties’ assent expressed, then under the objective theory of contracts, the objective manifestation of the intention should prevail.

In other words, if the parties do not have an express contract, the parties’ actions, behavior and conduct will help determine if the parties considered themselves to be bound in a contract objectively as opposed to what they subjectively express their intention to be.

Takeaways 

So, what is the mutual assent legal definition?

What is the meaning of mutual assent in contract law?

Let’s look at a summary of our findings.

Mutual Assent:

Related legal terms 

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