Meeting Of The Minds

AAA

DEFINITION of 'Meeting Of The Minds'

An agreement between parties in which each party is aware of the commitments that is being made by each individual. Meeting of the minds, or consensus ad idem, is associated with contract law and is fundamental for the existence of a contract. If both parties to a contract make a mistake in the contract's creation, and may thus be agreeing to perform actions other than what both expected, there would not be a meeting of the minds.

INVESTOPEDIA EXPLAINS 'Meeting Of The Minds'

For example, a business needing to resupply its inventory of toys and speaks with a local supplier. The businessman indicates that he is looking to buy the supplier's stock, which he takes to be the supply of toys that the supplier has. The supplier, however, thinks that the businessman is looking to buy out his business, hence his "stock" of shares. Because both parties are not agreeing to the same material exchange there is no meeting of the minds, and thus no agreement.

RELATED TERMS
  1. Implied Contract

    A legal substitute for a contract. An implied contract is an ...
  2. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
  3. Contract Holder

    An individual or organization who owns the rights to a debt or ...
  4. Failure To Deliver

    An outcome in a transaction where one of the counterparties in ...
  5. Anticipatory Breach

    In contract law, an action that shows a party's intention to ...
  6. Copyright Infringement

    The use or production of copyright protected material without ...
Related Articles
  1. Attention Home Buyers! Why You Need ...
    Home & Auto

    Attention Home Buyers! Why You Need ...

  2. How To Pick The Right Lawyer
    Personal Finance

    How To Pick The Right Lawyer

  3. Housing Deals That Fall Through
    Options & Futures

    Housing Deals That Fall Through

  4. Protect Your Company From Employee Lawsuits
    Home & Auto

    Protect Your Company From Employee Lawsuits

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center