Home > West's Encyclopedia of American Law > Objective Theory of Contract

A principle in U.S. law that the existence of a contract is determined by the legal significance of the external acts of a party to a purported agreement, rather than by the actual intent of the parties.

Some disagreement exists as to whether the COMMON LAW governing contracts required judges to determine the subjective intent of the parties in order to recognize the existence of a contract, or whether judges were required to view the external acts of the parties and then determine, in an objective manner, whether a contract had been formed. Some scholars maintain that the common law had long employed an objective test for recognizing a contract. Other scholars and writers claim that the widespread use of the objective theory of contracts in the courts was a much more recent phenomenon, perhaps developed during the late nineteenth century.

Whatever the...