Answer:
When assessing the validity of a contract, the court will consider:
C) How the parties' conduct would be interpreted by a reasonable person
The key principle that courts use to determine whether a valid contract exists is the objective theory of contracts. This means that the court looks at how a reasonable person would interpret the words and conduct of the contracting parties, not their subjective thoughts or beliefs.
Specifically:
A) What the parties were thinking when they formed the contract - This is irrelevant under the objective theory. The court does not attempt to read the parties' minds.
B) What the parties believed the contract terms to be - This is also irrelevant. The court looks to the objective manifestations of assent, not secret subjective beliefs.
C) How the parties' conduct would be interpreted by a reasonable person - CORRECT. The court asks what a reasonable person would think the parties' words and conduct signified. This objective viewpoint determines whether mutual assent occurred.
So in assessing contractual validity, the court applies the objective theory of contracts and considers what a reasonable person would think the parties' conduct signified. The parties' private thoughts and beliefs are not considered.
Step-by-step explanation:
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