What Is Subjective Test in Contract Law

When it comes to contract law, there are many different types of tests that can be applied to determine the validity of a contract. One such test is the subjective test, which is a legal principle used to ascertain whether or not a particular term of a contract is enforceable.

According to the subjective test, the enforceability of a contract term is dependent on the subjective intentions of the parties who entered into the contract. In other words, the test seeks to determine whether or not both parties actually intended to agree to a specific term of the contract at the time it was signed, based on factors such as their behavior before, during, and after the negotiation process.

There are several factors that courts typically consider when applying the subjective test in contract law. One such factor is the nature of the transaction in question. For example, if the contract relates to a commercial transaction, then the court will typically place greater emphasis on the objective elements of the agreement, such as the written terms of the contract and industry practices, rather than on the subjective intentions of the parties involved.

Another important factor that courts will consider when applying the subjective test is the relationship between the parties. In general, if the parties have an established relationship, such as a long-standing business partnership, then the court will likely place more importance on the subjective intentions of the parties in determining the enforceability of a contract term.

Despite the usefulness of the subjective test, it is not without its limitations. One of the main challenges associated with the subjective test is that it can be difficult to establish the true intentions of the parties involved in a contract. This is particularly true in cases where the parties have not communicated their intentions clearly or where there is a dispute regarding the interpretation of the contract.

In conclusion, the subjective test is an important legal principle used in contract law to determine whether or not a particular term of a contract is enforceable. Although it can be challenging to apply in practice, the subjective test can be a valuable tool for courts seeking to ascertain the true intentions of the parties involved in a contract and ensure that contracts are upheld in a fair and just manner.