A basic definition, of a contract is an agreement enforceable at Law. Institutional writers, whose works, strongly influenced, Scots Law, wrote of Contract as a ‘form of obligation’. Erskine defined a contract as a ‘legal tie, by which one is bound to pay or perform, something to another’. However, it should be noted, under some circumstances, certain ‘legal ties’ or obligations, may have legal consequences, but are not legally enforceable. A contract has been defined in the ‘Digest of English Civil Law’ as ‘an agreement, which creates, or is intended to create, a legal obligation, between the parties to it’.
The contract is based upon its ingredients, such as the ‘Offer’, the ‘Acceptance of the Offer’ and the ‘Intention’ of both parties (the Offeror and the Offeree or Acceptor) to be bound by the terms of the contract. Consensus in idem, literally means, ‘a meeting of the minds’, or an agreement, as to the same thing. In other words it is the common consent, necessary for a binding contract. This idea evolved, from the 19th century regard for the free market, and ‘Laissez Faire’. It is a minimalist approach, to contractual relations, between people, which are enforceable by the Law.
Parties must be in mutual agreement, to the terms, which bind them, in order for, consensus in idem, to exist. This is displayed by the words of Bell, ‘ To a perfect obligation, (besides the proof requisite), it is necessary that there shall be a deliberate and voluntary consent to engage’. Consent to contract, however can be viewed, in a ‘Subjective’ sense, considering elements, which invalidate such ‘agreement’, as well as incapacity to do so, based upon the nature of the party involved, or how, such consent, is obtained.
Such a perspective, can be demonstrated in Harvey V. Smith, (1904) 6F, 511, where ‘missives’ were held, not to be binding, on an illiterate man. The contract, formed, in this case, seems to have found its existence, owing to, the incapacity, of one of the parties (the defendant), based on his illiteracy and a lack of understanding of the terms, the contract involved. However, the decision, made by the judge presiding, was on, grounds of distinguishing between ‘the plain meanings of words’ and ‘highly technical rules’.
When Does A Contract Exist
It seems that this decision, was made, because the judge, sought to avoid, an objective approach, as to the nature of consent, owing to sympathy with the defendant’s weaker position, and insufficient means, to establish, ‘Facility and Circumvention’ or ‘Undue Influence’. An ‘Objective’ standpoint can be found, in the words of Lord Russell of Killowen, from the English case of, Esso Petroleum Ltd V. Commissioners of Custom & Excise,  All E. R. here he said that, ‘it is trite law, that if on analysis, a transaction has in Law, one character, the fact that the parties either accidentally or deliberately, frame the transaction, in language appropriate, to a transaction of a different character, will not deny it, to its true character’. The idea behind this, objective approach is that a contract’s legal effects should not be based upon the ‘intentions’ of the parties involved in it. In the appeal case of, Muirhead & Turnbull V. Dickson, (1905) 7F. 686, the parties involved were in dispute about whether, the contract between them, was one of Hire Purchase or Sale.
Lord President Dunedin stated that, ‘contracts cannot be arranged, by what people think in their inmost minds… contracts are made according to what people say’. Consequently, it can be said that, when tested objectively, a person’s ‘secret intent’, behind consenting, to enter into a contract, is not relevant as far as the law is concerned. The ‘Subjective Approach’ to ascertain consensus, deals with situations of its improper attainment, which invalidates, the contract in question, as there is no actual ‘meeting of minds’. Circumvention’ is a form of ‘Constructive Fraud’, conforming with, Lord President M’Neill’s definition, from M’Keller V. M’Keller. 1861, 24 D. 143. In such a crime, consent is obtained by ‘outwitting or circumventing’ another party. Facility is the necessary foundation, for the plea of circumvention, distinguishing it from fraud. It means a weakening of the facilities, owing to severe illness, old age and sometimes even intoxication, as in Jackson V. Pollock, 1900, 8. S. L. T. 267. A typical example of a contract rendered void, due to circumvention, is Sunderland V. W.
M. Low & Co. Ltd (1901) 3F. 972, where a party T, who was insolvent to debt, convinced his ‘facile’ brother-in-law S, to become a ‘cautioner’ in a bond, for the amount, of his debt, by telling him, ‘that he would never have to pay, if he signed and consulting a law-agent was unnecessary’. S was charged to pay the sum, but the Courts held the obligation to be reduced, on grounds of ‘circumvention owing to facility’. ‘Force and Fear’ is demonstrated similarly as, ‘consent improperly obtained, undermining contract’ as in the case of The Earl of Orkney V. Vinfra, (1606) Mor. 6,481, where the Earl forced Vinfra, to contract with him, by threatening him with a sword. The contract was held, to be null, as ‘the exception of fear, was very relevant’. However, fear of lawful consequences, does not from sufficient grounds, to plead, a forced consent, as in Priestnell V. Hutcheson, (1857) 19 D. 485. Other means of obtaining consent improperly, leading to annulment, of contracts, include ‘Undue Influence’, Error and ‘Misrepresentation’ of any sort. ‘Consensus’ between the parties of a contract, when objectively perceived, may be in question, in some circumstances, and nevertheless the contract upheld.
This is because, as previously mentioned, the legal consequences of contractual committal, sometimes differ from the intent, of the deliberating parties in question. Consent given, owing to an error, entertained by, one of the parties, was not considered, by itself sufficient, to nullify the contract, in the case of, Stewart V. Kennedy, (1890) 17 R, (H. L. ) 25. Error in Scots Law, is not a basis, for avoidance, of an obligation, founded on consent, but may preclude, the giving of that consent.
In the previously mentioned case, it was held, affirming the session court’s decision, that (irrespective of intent), ‘ the appellant, could not claim, to have the contract reduced, merely because, he understood it to be, other than, it really was’. A similar decision which, upheld the terms of the contract, without considering the intent of, one of the parties, (in this case the defendant) was made, in the famous English case, of Carlill V. Carbolic Smoke Ball Co.  1. Q. B. 256. Usually an ‘offer’, is made to one particular Legal Personality, however in some cases, as demonstrated in this one, it can be made to the whole world.
The defendants were the proprietors of the ‘Carbolic Smoke Ball’, which they advertised, to be preventive, of any disease, associated with ‘taking cold’. The advertisement, also offered, to pay a sum of money, to any party, who contracted ‘influenza’ after the ‘prescribed usage’ of their product. Mrs Carlill, the plaintiff, did exactly this, and then sought to claim the, sum offered. The Court of Appeal, interpreted the advertisement as, an offer to a ‘unilateral contract’ where, as in this case, the sum payable was based upon, the fulfilment of a condition, which was ‘contracting influenza’.
The defence, claimed the case to be, similar to Harris V. Nickerson, Law Rep. 8 Q. B. 286, where the advertisement, was held too vague, to be the basis, of a contract. Furthermore they stated that the advertisement was a ‘mere puff’ which meant nothing, and that it was not the intent of the defendants to contract, although the company had claimed, in the advertisement, to have deposited, a sum of money in the Alliance Bank, as a sign of good faith. Hawkins J. ound for the plaintiff, as he judged, the intent of the defendants to be immaterial, and that the facts of the case did indeed establish a contract, although there was clearly no ‘Consensus in idem’. Another example of how the objective approach, to ascertaining ‘consensus’, can enforce a contract without a ‘meeting of minds’, can be found in Buchannan V. The Duke of Hamilton, (1878) 5. R. (H. L. ) 69. In the words of Lord Blackburn; ‘ It is not enough, that the parties, were not agreed.
It may have been, that one of them meant one thing and the other, the other. Nevertheless… if one has so conducted… that if he had been, a reasonable man, he would have known, that the other side, did agree, to certain terms, and if, the other side did, in fact, in consequence of his so acting, believe it, it matters not, that man, did not really mean, to do it. He would be… personally barred from disputing, he was bound, by the terms, which the other side had been led to believe were relied on, by him’.
In an ideal contract, the parties to it would fulfil, the terms, in complete agreement, as to what the contract is. This is where Consensus in idem, exists. However such Consensus, is not really a ‘meeting of minds’, in the strictest sense of the expression, when real contracts are dealt with. This is because it seems, that the Law of Contract does, make the sanction, for circumstances where a contract, may be completed, without the parties ever having been in agreement at all.