Objectivity in Contract Law

   In English law, an objective approach is used as a 'general rule', which takes into consideration the 'words and conduct' of the parties involved as opposed to their 'subjective state of mind', as is outlined by Lord Clarke. The benefits of this are the 'certainty and predictability in commercial disputes' which is pointed out by Steyn in 'The Reasonable Expectations of Honest Men' (1997). If the law were to bestow a subjective approach with legal force, the outcome would most likely be a catastrophic one- cases would be substantially longer, the outcomes of them would be increasingly unpredictable as the individual mindsets of promisees/promisors would have to be taken into account each time, this could also be considered to constitute an additional financial burden on the part of those who do have to pursue legal proceedings. The objective test, noted by Steyn as 'the English way' is excellent at providing stability and predictability in the outcome of cases, which is of particular importance in the commercial realm.

Howarth has attempted to distinguish between the different types of objective approach which can be applied. He states that the term 'promisor' is to be used in relation to those who wish to prevent a promise from being executed, where as the term 'promisee' is to be considered to relate to those who wish to have a promise enforced. Howarth, in his text 'The Meaning of Objectivity in Contract' has distinguished between three distinct approaches.

1) Promisee objectivity -> This alludes to the way in which the reasonable promisee would interpret the terms of the promise.
2) Promisor objectivity -> The manner in which the reasonable promisor would interpret the terms.
3) Detached objectivity -> How an independent and neutral by-stander would interpret the terms of the promise.

In English law, it has been suggested that the promisee objectivity component is the most utilised component, however, this is not to state that promisor objectivity is not of importance. It is often the case that courts will consider both perspectives.

Despite the 'general rule' being in place that the subjective approach will not be considered, in instances where it has been determined that parties have attempted to 'snap up' promises which were not intended by the promisor the courts have resorted to the subjective interpretation. This is also true in instances where mistakes have been made.