DEFINITION of Meeting of the Minds

A meeting of the minds is an agreement between parties where each party is aware of the commitments 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 they might be agreeing to perform actions other than what both expected. This would mean there was not a meeting of the minds.

BREAKING DOWN Meeting of the Minds

A breakdown in communication can disrupt the potential for a meeting of the minds and lead to unintended consequences for all parties. 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 the businessman understands to mean the supply of toys that the supplier has. The supplier thinks that the businessman is looking to buy out his business by acquiring 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.

How a Meeting of the Minds Is Essential for Contracts

Establishing that a true meeting of the minds took place between parties can be a challenge in court when contracts come into dispute. If a plaintiff charges there was a breach of contract by a defendant, it is possible the defendant might claim that their understanding and interpretation of the contract invalidates that claim and allowed the actions that triggered the litigation. For example, a contract might state that the defendant must pay the plaintiff for use of a product or service for a specified amount. There might even be a hell or high water contract to enforce the plaintiff’s right to payment.

The defendant might argue that their understanding of the contract allowed for payments to be made at a time interval that was different from the plaintiff. They might claim the payments would be broken up over a longer period of time if the contract does not include detailed language establishing due dates. Such a defense argument might fail in court if it can be established that a reasonable person reviewing the contract would indeed interpret its intent and purpose with the same regard that the plaintiff presented in their argument. This would imply that there was, in fact, a meeting of the minds when the parties originally laid out and signed the contract.