How to understand Mutual Assent and Consideration in Contracts

If you're studying contracts, you should know what a contract is - that is, what it consists of. A contract must have mutual assent and consideration. But what are these things? And how do you know if they're present to form a binding contract?

Things You'll Need

  • moderate intelligence
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Instructions

    • 1

      Ask yourself, does this look like a contract? If it does, then there is like mutual assent and consideration. But we still have to check.

    • 2

      Check for mutual assent. Do both parties understand each other? Do their words and conduct tend to show that an agreement has been reached? If so, then there is mutual assent.

    • 3

      However, scan the fact pattern and be certain that both parties are attributing the same meanings to all of the terms. If they are not, there may not be a "meeting of the minds," and thus, no mutual assent.

      For example: I contract with my handyman to "finish" my basement. There may be an issue with our contract if I mean "finish" as constructing a completely livable space (whereas the handyman thinks "finish" means just sheet rocking). We would have "no meeting of the minds."

      Obviously, there several legal doctrines that prepare for such a scenario, but let's not worry about those now.

      Just be sure to check for mutual assent.

    • 4

      If you've found mutual assent, it's time to move on to check for consideration. Is there a true bargain taking place. Are both parties exchanging something?

      In my above example, the exchange would be the handyman' s service in exchange (presumable) for money.

      But be sure it is a true bargain! If you see in the fact pattern that a father has "contracted" to pay his son $20,000 to buy one of the son's old, tatty, books...(probably a device used to give the son money and have it taxed less) there is no contract! Why? It is not a TRUE bargain. bargain.

      Both parties must be bargaining in good faith.

    • 5

      If you have identified both mutual assent and consideration, then you've identified a contract!

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