Legal Definitions - subjective method

The subjective method is a way of interpreting a contract based on the parties' subjective intentions or beliefs. This approach is now largely outmoded.

Under the subjective theory of contract, if two parties entered into a contract with different understandings of what the terms meant, the contract would be considered invalid. For example, if one party believed that a car being sold had a working engine, but the other party knew it did not, the contract would not be enforceable.

This example illustrates how the subjective theory of contract focuses on the parties' individual beliefs and intentions, rather than an objective interpretation of the contract's terms.