- Video
When Are Contracts Legally Binding? Promise Theory vs. Objective Theory of Contract
Professor Randy Barnett explains two of the main competing theories of contracts - contracts as promise and the objective theory of contracts. The promise theory posits that a contract is binding because the parties have agreed to be bound by it. But what if one party didn’t realize what they were promising or acted in bad faith - should they be released from the contract? The objective theory of contract says that in such a case the contract is binding anyway, and the contract should be enforceable according to a reasonable, ordinary understanding of the terms used rather than according to what someone thought they were promising. https://youtube.com/watch?v=vw57wLhOjW0