Friday, October 2, 2009

"Meeting of the minds" as an element of contract formation

A "meeting of the minds" is a phrase that nobody uses in ordinary discourse, or even in business correspondence. But that does not change the fact that the matter of "whether the minds met" can make or break a breach-of-contract claim when it ends up in court (or in arbitration, for that matter).  

 What does the "meeting of the minds" mean in the contracting context?

“Meeting of the minds” describes the mutual understanding and assent to the agreement regarding the subject matter and the essential terms of the contract. Weynand v. Weynand, 990 S.W.2d 843, 846 (Tex. App.—Dallas 1999, pet. denied). “The parties must agree to the same thing, in the same sense, at the same time.” Id.
The essential elements required, in writing, for the sale of real property are the price, the property description, and the seller’s signature. See Rus-Ann Dev., Inc. v. ECGC, Inc., 222 S.W.3d 921, 927 (Tex. App.—Tyler 2007, no pet.); Lynx Exploration & Prod. Co. v. 4-Sight Operating Co., 891 S.W.2d 785, 788 (Tex. App.—Texarkana 1995, writ denied).

Meeting of the Minds and enforceability of contracts

However, this does not mean that a contract containing these terms would remain enforceable if additional terms are incorporated into the agreement that are so indefinite that the court could not fix the legal obligation and liabilities of the parties. Lynx Exploration, 891 S.W.2d at 788.

Here, there is no dispute the Fines agreed to sell and the Pollards agreed to buy the real property that was the subject matter of the Commercial Contract. The parties agreed on all terms essential to that sale, including, but not limited to, the sales price, financing, payment of earnest money, inspection of the property, fees, and details regarding closing and possession of the property. We conclude Stephen did not conclusively establish that there was no meeting of the minds with regard to the contract.

Establishing and Disputing the Meeting of the Minds Element of a Contract Claim 

Whether the parties have come to a “meeting of the minds” is measured objectively according to what the parties said and did. Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex. App.—San Antonio 1999, pet. denied). The parties’ subjective thoughts and beliefs do not control. Id. When the “meeting of the minds” element is contested, it is a question for the fact finder. Hallmark v. Hand, 885 S.W.2d 471, 476 (Tex. App.—El Paso 1994, writ denied).

SOURCE: 04-08-00745-CV (9/9/09) (San Antonio Court of Appeals)

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