Mutual Assent
What Is Mutual Assent?
Mutual assent is the term for when two or more parties reach an agreement and create a contract based on that agreement. Also called a “meeting of the minds,” mutual assent is an important part of contract law.
It holds the parties accountable to the terms of a written agreement, which can be upheld in a court of law. In order for mutual assent to occur, there must be an offer and an acceptance of that offer.
What Is Required to Establish Mutual Assent?
Although mutual assent can happen with a simple verbal agreement, such as “I accept your offer,” a binding legal contract requires several essential elements. They include:
- Consideration: Both parties have agreed to exchange something of value.
- Clear offer: One party makes an offer that is accepted by the other party.
- Purpose: The contract must have a clear, legal purpose. The contract cannot involve illegal acts.
- Capability: Both parties must be able to understand and fulfill the terms of the agreement.
If one party does not fulfill their part of the contract, it is a breach of contract. The party damaged by the breach may then file a civil lawsuit.
It will be up to the court to determine if one party made a mistake and agreed to the terms of the contract without complete information or with erroneous information.
What Is a Basic Assumption?
A basic assumption is an understanding that relates directly to the basic information of the agreement. The two parties should have the same interpretation of the item or service that is part of the contract and a clear understanding of payment terms.
However, the possibility of mistakes exists. The two different types of mistakes involving mutual assent include a mutual mistake and a unilateral mistake.
| Mutual Mistake | Unilateral Mistake |
| Both parties made the mistake at the time of the contract signing. | One party made the mistake |
| The mistake has to do with the contract’s basic assumptions. | The mistake has to do with one party’s understanding of the contract. |
| The mistake can lead to a material effect on the exchange specified in the contract. | The result of the mistake is that enforcement of the contract would be unconscionable. |
| The contract can be voided by the party the mistake affects. | The other party had reason to know of the mistake. |
To avoid these potential problems, a contract should include as much detail as possible, including a complete description of the item or service, all costs and payment terms, obligations of each party, timelines, and any other information that is important to the agreement.
Examples of Mutual Assent
An example of mutual assent in real estate occurs when a buyer offers to buy a home from a seller. Both parties sign a contract that includes information about the property, the selling price, and other conditions pertinent to the agreement.
Mutual assent can also occur in other exchanges, such as a car transaction. If one person offers to sell their car for $25,000, and the other individual accepts the offer, their agreement is mutual assent. Both parties must fulfill their obligations set out in the contract.
Start Your Free Affidavit Form Here
Helpful Resources:
NYU Law - Contract Formation Mutual Assent
Foundations of Law - Mutual Assent
University of Texas at San Antonio - What Defines a Contract?
University of Chicago Law School - Mutual Assent Versus Gradual Ascent
What Is Mutual Assent?
Mutual assent is the term for when two or more parties reach an agreement and create a contract based on that agreement. Also called a “meeting of the minds,” mutual assent is an important part of contract law.
It holds the parties accountable to the terms of a written agreement, which can be upheld in a court of law. In order for mutual assent to occur, there must be an offer and an acceptance of that offer.
What Is Required to Establish Mutual Assent?
Although mutual assent can happen with a simple verbal agreement, such as “I accept your offer,” a binding legal contract requires several essential elements. They include:
- Consideration: Both parties have agreed to exchange something of value.
- Clear offer: One party makes an offer that is accepted by the other party.
- Purpose: The contract must have a clear, legal purpose. The contract cannot involve illegal acts.
- Capability: Both parties must be able to understand and fulfill the terms of the agreement.
If one party does not fulfill their part of the contract, it is a breach of contract. The party damaged by the breach may then file a civil lawsuit.
It will be up to the court to determine if one party made a mistake and agreed to the terms of the contract without complete information or with erroneous information.
What Is a Basic Assumption?
A basic assumption is an understanding that relates directly to the basic information of the agreement. The two parties should have the same interpretation of the item or service that is part of the contract and a clear understanding of payment terms.
However, the possibility of mistakes exists. The two different types of mistakes involving mutual assent include a mutual mistake and a unilateral mistake.
| Mutual Mistake | Unilateral Mistake |
| Both parties made the mistake at the time of the contract signing. | One party made the mistake |
| The mistake has to do with the contract’s basic assumptions. | The mistake has to do with one party’s understanding of the contract. |
| The mistake can lead to a material effect on the exchange specified in the contract. | The result of the mistake is that enforcement of the contract would be unconscionable. |
| The contract can be voided by the party the mistake affects. | The other party had reason to know of the mistake. |
To avoid these potential problems, a contract should include as much detail as possible, including a complete description of the item or service, all costs and payment terms, obligations of each party, timelines, and any other information that is important to the agreement.
Examples of Mutual Assent
An example of mutual assent in real estate occurs when a buyer offers to buy a home from a seller. Both parties sign a contract that includes information about the property, the selling price, and other conditions pertinent to the agreement.
Mutual assent can also occur in other exchanges, such as a car transaction. If one person offers to sell their car for $25,000, and the other individual accepts the offer, their agreement is mutual assent. Both parties must fulfill their obligations set out in the contract.
Start Your Free Affidavit Form Here
Helpful Resources:
NYU Law - Contract Formation Mutual Assent
Foundations of Law - Mutual Assent
University of Texas at San Antonio - What Defines a Contract?
University of Chicago Law School - Mutual Assent Versus Gradual Ascent