Against the 'Meeting of the Minds': Exploring a New Basis for Contractual Liability

38 Pages Posted: 21 Nov 2002

See all articles by Omri Ben-Shahar

Omri Ben-Shahar

University of Chicago Law School

Date Written: October 2002

Abstract

This Essay explores an alternative to one of the pillars of contract law, that obligations arise only when there is a 'meeting of the minds' - when the parties reach consensus over the terms of the transaction. It explores a new principle of 'no-retraction', under which each party is obligated to terms it proposed, even if different from the terms proposed by the other, and can retract only with some liability. In contrast to the all-or-nothing nature of the meeting-of-the-minds regime, where preliminary forms of consent are either full-blown contracts or create no obligation, under the no-retraction regime obligations emerge gradually and in continuous fashion, as the positions of the negotiating parties draw closer and the magnitude of their understanding increases. The analysis shows that the no-retraction liability regime can be coupled with different damage measures, to advance various social goals, including optimal reliance. It then explores various prominent doctrines and cases in the law of assent and contract formation, which produced a puzzling and inconsistent jurisprudence, and demonstrates how these issues would be resolved in a simple and unified fashion under the no-retraction approach. Finally, the analysis provides a fresh understanding of the obligation to negotiate in good faith, and explores a new criterion for gap filling in incomplete contracts.

JEL Classification: K12

Suggested Citation

Ben-Shahar, Omri, Against the 'Meeting of the Minds': Exploring a New Basis for Contractual Liability (October 2002). Available at SSRN: https://ssrn.com/abstract=341700 or http://dx.doi.org/10.2139/ssrn.341700

Omri Ben-Shahar (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

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