In this essay I propose to discuss the objective view of contract law in an ever developing commercial world that relies more on contracts than perhaps in the past and the need for it to be fair to both parties and interpret the true intention of the contracting parities. The essay will also look at the development of various pieces of statutory law albeit very generally. Further the need to promote fairness and objectivity in dealing with contract disputes underpins the basic principles of English contract law.
The objective test in contract law is common with most European legal systems. This was first, set out in English law in the case of Smith v Hughes[i]. This case I would argue provides a good starting point for dealing with cases from the objective standpoint, particularly the judgment of Blackburn J where he states; ‘If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other parties terms.;[ii]
Thus, by way of contrast the subjective test is used to establish the actual intentions of the parties contracting and the objective test therefore ascertains what the parties actually said and did and not what they intended to say or do.[iii] The argument which supports the use of the objective test stems from the commercial justification namely ‘that great uncertainty would be caused if a person who appeared to have agreed to certain terms could escape liability
Bibliography: Kramer, Adam‘Common Sense Principles of Contract Interpretation (and how we 've been using them all along)’ Oxford J Legal Studies (2003) 23 (2): 173 Cases Smith v Hughes (1871) LR 6 QB 597 Statute