Mutual Assent

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Mutual assent is an agreement between two parties that intend to form a contract. Also known as a “meeting of the minds,” mutual assent signifies that the parties agree to the terms they are setting, as long as the necessary requirements are in place. Such a consensus is the first step in the contractual process. To explore this concept, consider the following mutual assent definition.

Definition of Assent

Noun

  1. A deliberate approval of known facts offered by another for agreement, consent, or acceptance.

Verb

  1. To agree or concur.

Origin

1250-100   Middle English asenten

The Concept of Mutual Assent

When two or more parties discuss terms for the purpose of entering into a contract together, the act of agreeing to the terms is considered “mutual assent.” While this meeting of the minds does not in itself create a binding agreement, it is a necessary factor in any legally binding contract. This concept applies to both written and oral agreements, and while enforcement of a written contract is generally easier, courts consider whether there was mutual assent in determining the validity of a verbal contract.

Elements of Mutual Assent

Mutual assent consists of two main elements, an offer and acceptance. An offer is a promise to do something, or to refrain from doing something, in return for something of value. Acceptance takes place when the other party agrees to the conditions made in the offer. Both the offer and acceptance must be stated in a way that makes it clear to another reasonable person that the parties have reached an understanding as to the terms of the agreement.

Examples of Mutual Assent

Mary’s New Car

Mary searched for a used car in her local classified ads, found one she was interested in, and called the number listed. Mary arranged with the car’s owner to look at the car in person. After taking a test drive, Mary offers Joe $5,000 for the car. Joe accepts the offer and provides Mary with the keys and title to the car. In this instance, Mary and Joe reached mutual assent as to the purchase price and deliverance of the car.

Pam expresses to her friend at lunch how amazing it must be to own a farm. Tom, who knows how much hard work his farm is, and who doesn’t believe Pam has a large amount of money available, jokingly offers to sell the farm to Pam for $10,000. Still jesting in Tom’s mind, the pair works out terms of a contract to sell the farm, writing them on the back of the lunch receipt, each party signing at the bottom.

Buying the Farm

Although Tom was joking, Pam had been serious and thought it was a valid offer, which she had accepted. Tom was surprised when Pam attempted to enforce the contract and buy the farm. This would be considered a legally binding contract, as the parties considered the terms, put them in writing, and added their signatures, signifying there was a meeting of the minds, or mutual consent. If a court found that Pam had a reasonable belief that the agreement was real, Tom may be required to follow through with it.

The Contract Process

Forming a contract typically consists of three phases: (1) Contemplating the deal, (2) reaching an agreement (this is known as “mutual assent,)” and (3) performance and enforcement.

  1. Contemplating the deal takes place when the parties assess the risks and benefits of the proposed arrangement. This is also when the parties determine whether or not they can trust the other party.
  2. Reaching an agreement, or mutual assent, occurs when the parties negotiate and agree to the other’s terms, often with a verbal agreement. The parties may agree verbally, sign a contract, or otherwise confirm their agreement.
  3. Performance and enforcement is the final step in the contract process, as the parties perform their mutual obligations under the agreement. If one party fails to perform his duties under the contract, the other party may file a civil lawsuit to enforce it.

Required Elements of a Legally Binding Contract

Mutual assent alone is not enough to create a legally binding contract in which a party is obliged to perform. For any contract to be enforceable by a court of law, it must contain certain elements:

  • Consideration – A promise of each party to provide something of value to the other.
  • Offer and acceptance – A clearly defined offer made by one party, and a clear acceptance by the other party.
  • Legal purpose –The purpose of the contract, and all of the terms it contains, must be legal. For example, a person could not sue another person for failing to pay the agreed amount for a drug purchase.
  • Capable parties –All parties making the contract must be capable of doing so. This means that the parties are of legal age, mentally sound, and able to understand exactly what they are agreeing to.

Breaching a Contract

A breach of contract takes place when a party to a contract fails to fulfill his end of the bargain. When this happens, the non-breaching party may file a civil lawsuit to recover damages caused by the other party’s breach. The most common remedies available under the law include an order for the breaching party to pay monetary damages, or an order for the breaching party to perform his duties under the contract.

Related Legal Terms and Issues

  • Contract — An agreement between two or more parties in which a promise is made to do or provide something in return for a valuable benefit.
  • Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property, or an injury.
  • Performance – The act of doing that which is required by contract.