De­c­la­ra­tion of intent–what’s behind it?

Every time you enter into a legal trans­ac­tion, you must express your intention to cooperate: “I would like to buy this car!” or: “I would like to commit to this rental agreement!” This might sound banal at first, but it is the deciding factor in civil law – without an orderly de­c­la­ra­tion of intent, no contract can be signed, and no legal trans­ac­tion can be suc­cess­ful­ly completed.

Every contract requires at least one de­c­la­ra­tion of intent – without this no legal trans­ac­tion can take place. The number of involved de­c­la­ra­tions – whether it’s just one person ex­press­ing their wishes, or two people are involved – depends on whether a one-sided or two-sided legal trans­ac­tion is to take place. With purchase or rental agree­ments, for example, two people are always involved: One side makes an offer, the other accepts it. In this case, both parties must ef­fec­tive­ly express their intention to enter a legal relation – with an emphasis on “effective.” Not every de­c­la­ra­tion of one’s in­ten­tions acts as an effective de­c­la­ra­tion of intent.

The most important thing is that a statement is made. Without this you can’t complete a legal trans­ac­tion, whether verbal or written. In addition, the receiver must also receive the de­c­la­ra­tion of intent, unless this step isn’t necessary. No obstacles should stand in the way of you making an effective de­c­la­ra­tion.

We can dif­fer­en­ti­ate between two types of de­c­la­ra­tion of intent. The most common type is the uni­lat­er­al de­c­la­ra­tion of intent. When you make a statement that expresses intent to enter legal oblig­a­tions, a second party is usually involved. For example, it can involve direct contact between two parties.

Even if the recipient is absent, a de­c­la­ra­tion of intent can still be expressed. In this case, for example with a letter of cor­re­spon­dence, the statement is only valid once the recipient receives it. In this case, it’s ir­rel­e­vant whether the recipient is aware of it. What’s most important, is that the recipient has the pos­si­bil­i­ty to read the de­c­la­ra­tion of intent – that it’s within their sphere of influence.

The second type is a de­c­la­ra­tion of intent requiring com­mu­ni­ca­tion. For this to be valid, it’s enough that the de­c­la­ra­tion is submitted. It’s not necessary that someone becomes aware of it. The most common example of this is a will or testament. No matter if this is sent to someone or not, it is still valid.

Every de­c­la­ra­tion of intent is made up of two prin­ci­ples:

• Sub­jec­tive intent
• Objective intent

Sub­jec­tive intent is based on the state of mind of the subject, i.e. the person declaring their intent. Three elements define this form of intent. For one, a desire to act is required, i.e. a known inner intent must exist to do something or have something done. This also means that – although it may sound trivial, but is an important aspect – that un­con­scious people (including those sleeping) cannot provide a valid de­c­la­ra­tion of intent.

In addition, the subject must be aware that they are making the statement. This means that they want to express their desire to act. According to this, they must be aware that their actions will lead to a legal trans­ac­tion, for example the signing of a contract. After all, the subject must also have an intent to create legal relations. This relates to the con­clu­sion of a concrete legal trans­ac­tion, including its related con­se­quences.

These elements are all directed at the subject and his in­ten­tions. To make a de­c­la­ra­tion of intent valid, it must however also be outwardly expressed. And the ex­pla­na­tion must be sub­jec­tive­ly un­der­stand­able.

Objective intent is fulfilled when the de­c­la­ra­tion is ex­plic­it­ly made in written or verbal form or if this is implied. This means that a person’s implied behavior can serve as an ex­pla­na­tion for a person’s intent. For example, if you get on a train, you have implied that you want to travel on this train. What’s important is that an objective third person can also observe that the person in question accepts the legal con­se­quences of their own accord. Ut­ter­ances made, for example, with the threat of violence, do not count.

Beyond this, the intention to create a legal com­mit­ment con­sti­tutes towards a valid de­c­la­ra­tion of intent. The subject must signal that he wants to enter the legal trans­ac­tion, as is the case in the signing of a contract. This changes, for example, in the case of rec­om­men­da­tions or favors. The side that offers to help does not want to enter a legal agreement and does not want to be held ac­count­able for the con­se­quences of their actions. When it comes to the intention to create a legal com­mit­ment, it must be clear also to an objective third party that the statement is correctly in­ter­pret­ed. If not, the subject was too ambiguous in their statement

To make a de­c­la­ra­tion of intent valid, two con­di­tions must be fulfilled: It must be made in an effective way, and it must (if required) ef­fec­tive­ly register with the recipient.

A de­c­la­ra­tion of intent begins with an outwardly ex­pla­na­tion: a de­lib­er­ate and voluntary one. If we’re talking about a uni­lat­er­al de­c­la­ra­tion of intent, the process is already complete.

It’s different with a de­c­la­ra­tion of intent that requires com­mu­ni­ca­tion, though: In this situation, the statement must be made towards a receiver. In addition, you must dif­fer­en­ti­ate between receivers who are present and absent. A person that’s present will instantly receive the de­c­la­ra­tion of intent, while for those absent the trans­ac­tion is only suc­cess­ful once it has followed a delivery process. For example, by placing a letter into the letterbox, the trans­ac­tion to those absent is regarded as complete.

When a de­c­la­ra­tion of intent that requires com­mu­ni­ca­tion is stated, two problems can arise:

In­ci­den­tal in­for­ma­tion: In this case, one party provides a de­c­la­ra­tion of intent, and is made aware of something intended for them, just ahead of time. The de­c­la­ra­tion of intent shouldn’t have reached the receiver at this stage. This is the case, for example, if the lessor on the ground floor overhears the con­ver­sa­tion between two tenants on the first floor, where one states: “I have a new job, in two month’s I’ll be ter­mi­nat­ing my lease.” Although this statement was intended for the lessor, it shouldn’t have reached him yet. He has only overheard the statement by chance. In this case, the de­c­la­ra­tion of intent is not regarded as received, since the tenant didn’t willingly bring it to the lessor’s attention.

Lost de­c­la­ra­tion of intent: It’s possible that a person for­mu­lates a written de­c­la­ra­tion of intent and signs it without bringing it to the attention of its receiver. Should a third person get involved with the de­c­la­ra­tion of intent, without the knowledge and against the will of the declaring party, then its validity is not granted. An example: Business owner B leaves a filled-in order form for a new dish­wash­er for the lunchroom on her desk. Her secretary assumes that the order should be placed as soon as possible and sends it off.

The declaring party (= B) has not made a de­c­la­ra­tion of intent with the intention to act. The de­c­la­ra­tion was not submitted. But in legal speak, there is another opinion: If B provoked this behavior by way of neg­li­gence, then the receiver can deem the trans­ac­tion as binding.

There are various grounds for in­va­lid­i­ty that can nullify a de­c­la­ra­tion of intent:

• Legal in­ca­pac­i­ty: According to US law, if you do not have legal com­pe­tence then you cannot make a de­c­la­ra­tion of intent.
• Joke ex­pla­na­tion: A de­c­la­ra­tion of intent is not valid if it’s intended as a joke. It’s also not valid if the receiver isn’t aware that it’s a joke. However, the declarant must be prepared to refund any costs that occurred due to a mis­un­der­stand­ing. Should the receiver ac­knowl­edge the joke, then the de­c­la­ra­tion of intent is com­plete­ly off the table.
• Mental reser­va­tion: If you keep to yourself that the de­c­la­ra­tion should not be taken seriously, and if this reser­va­tion is not rec­og­nized, then the de­c­la­ra­tion of intent is still valid. However, if the recipient is aware of this reser­va­tion, then the de­c­la­ra­tion is invalid.
• Fic­ti­tious trans­ac­tion: If you make a de­c­la­ra­tion of intent under false pretenses, whereby the con­trac­tu­al partner is in the know of this (for example to deceive a third party), the de­c­la­ra­tion is also deemed invalid.

Mis­un­der­stand­ings don’t au­to­mat­i­cal­ly make a de­c­la­ra­tion of intent invalid, but they do provide reasons to appeal.

• Contents error: If the contents of a contract are mis­un­der­stood and the de­c­la­ra­tion has already become legally binding, then it is still valid, but it can be appealed. Example: mis­un­der­stand­ing a foreign word.
• Ex­pla­na­tion error: if the ex­pla­na­tion of the de­c­la­ra­tion un­know­ing­ly deviates from the actual de­c­la­ra­tion, then it can be appealed. Example: a typo.
• Trans­mis­sion error: If an error occurred for example while it was being trans­mit­ted elec­tron­i­cal­ly and the actual de­c­la­ra­tion is falsified it can be appealed. Example: a mistake in the elec­tron­ic man­age­ment system.
• Property error: If as­sump­tions are mis­tak­ably made about certain at­trib­ut­es sur­round­ing the item in question or the contract partner, then the de­c­la­ra­tion of intent can be appealed. Example: jewelry made of brass instead of gold.
• In­ten­tion­al deception: Should the de­c­la­ra­tion of intent be created in the context of a de­lib­er­ate or malicious deception, it can be appealed. Example: a used car that’s sold as “accident free” although the seller had a traffic accident in the car.

What can’t be appealed is a so-called motive error: While forming the de­c­la­ra­tion, the declaring party is basing his as­sump­tions on a false motive, which informs the de­c­la­ra­tion. In this case, the declaring statement cannot be appealed. Example: wrongly assuming the cheapest price.

The best way to un­der­stand a de­c­la­ra­tion of intent is by way of examples. We’ll introduce you to various sit­u­a­tions that might arise in the delivery of the de­c­la­ra­tion based on two types of de­c­la­ra­tion of intent (de­c­la­ra­tion of intent requiring com­mu­ni­ca­tion/uni­lat­er­al de­c­la­ra­tion of intent).

A uni­lat­er­al de­c­la­ra­tion of intent is not that common. It can include:

• Com­pe­ti­tions (the promise of a reward for a specific action or activity)
• Foun­da­tions (a document that explains that assets can benefit a specific goal of the foun­da­tion)
• Testament or will

In this example, we assume that you want to create a testament to plan the dis­tri­b­u­tion of assets in a timely manner. In the United States, the two main will types are the written will and the holo­graph­ic will. The written will is rec­og­nized in all 50 states and must bear the testator’s signature at the bottom and the signature of at least two attesting witnesses. The holo­graph­ic will (not rec­og­nized in all states) on the other hand is a “self-proofed will” and does not require any attesting witnesses. The will merely has to be written entirely by the testator’s own hand and must be signed, at which point it will be valid.

By writing a testament, you fulfil all re­quire­ments for a de­c­la­ra­tion of intent. You have the intention to bequeath your assets. The intention of doing so with an un­der­stand­ing of legal con­se­quence is demon­strat­ed by recording it in the testament. And your intent to enter legal relations is also provided: In death, you would like the piece of legal writing in question to be dis­trib­uted. Sub­jec­tive­ly, your intent to act is clearly un­der­stand­able, and as long as you stick to all legal re­quire­ments, there is little potential for mis­un­der­stand­ings. The intention to enter legal relations is also clearly no­tice­able by a third party, for example an executor: It is clear, that the document forms a binding legal agreement.

A testament is directed at one or several people, who become a part of the legal trans­ac­tion in the process. Contrary to other de­c­la­ra­tions of intent, though, a will does not have to reach someone to become valid. Once you have signed the document, it’s valid. Even if you die directly after signing it and no one else but you has seen the testament. There are no grounds for in­va­lid­i­ty.

Every day we enter a de­c­la­ra­tion of intent which involve legal trans­ac­tions – for example, when shopping for breakfast rolls at the bakery. This involves a de­c­la­ra­tion of intent that requires com­mu­ni­ca­tion. But first, you’re still forming your de­c­la­ra­tion: you would like to buy some breakfast rolls. Your intention to act is therefore clear. You also have an intention of doing so with legal con­se­quences, as well as to enter legal relations. You can bring this across in different ways. Since the contract partner in question is the person on the opposite side of the counter, and is present, written state­ments and sending these isn’t necessary.

Generally speaking, orders are placed verbally: “Four rolls and two crois­sants, please!” It’s even possible to (partially) com­mu­ni­cate non­ver­bal­ly: by pointing to the product and holding up the number of fingers relating to your order. The other person can now interpret your intent. The price tag next to the baked goods informs you of the con­se­quences of the legal trans­ac­tion. A mis­un­der­stand­ing can arise if the items are not correctly labeled – for example, if a rye roll turns out to be a spelt roll when you bite into it, then this is a contents error. In this case you can – the­o­ret­i­cal­ly – appeal the de­c­la­ra­tion of intent.

Contrary to shopping bread, renting or letting an apartment is a very formal affair. Contracts are signed, either directly at the site with all involved contract partners, or the rental agreement is sent in the mail. In this case, you’re dealing with a de­c­la­ra­tion of intent requiring com­mu­ni­ca­tion between absentees.

Here, it’s clear that both sides will submit their de­c­la­ra­tions of intent – not only the tenant but the lessor also expresses his intent. If you’re a prospec­tive tenant and you receive the contract in the mail, then this will most likely already have the lessor’s signature on it. In doing so, the lessor has expressed their intent that they want to offer you the apartment based on agreed-upon con­di­tions, which are stated in the contract. With your signature, you’re also declaring your intent. Now, you only have to send it off to the receiver.

However, the de­c­la­ra­tion of intent only becomes valid once it’s been received by the tenant. It’s also important that the tenant receive the signed copy. It’s enough that this is in their sphere of influence. Once the post service has signed for the delivery and the envelope is accepted by a secretary or clerk, it’s possible for the tenant to read the contract without any problems. It’s different if the mail man throws in the letter on a Saturday, as you can’t expect the tenant to check his mail at the office on the weekend. That’s why the de­c­la­ra­tion of intent is regarded as valid only from the following Monday.

Although we’re dealing with a de­c­la­ra­tion of intent between absentees, the danger of a trans­mis­sion error is minimal. The messenger of the news is the mail carrier, who hardly has the pos­si­bil­i­ty to falsify the contents of the de­c­la­ra­tion, as this is a written document inside a sealed envelope. It’s different if the mail carrier were to deliver a verbal de­c­la­ra­tion. In this case, the mail carrier may un­know­ing­ly make a mistake.

But another error may occur and could lead to legal pro­ceed­ings: Let’s assume that your lessor sends the signed rental agreement over to you. Within, it states that the apartment will cost USD 500 per month. You’re a little confused, since you’d always spoken of USD 600. Happy about the discount, you sign the contract and send it back. However, the lessor has made a mistake by mistyping the monthly amount. Their intent is still to rent the apartment to you at USD 600 per month. This is a so-called ex­pla­na­tion error.

The question now is: Was it clear to you that you’re dealing with an error? For your reply, it’s less important how you in­ter­pret­ed the de­c­la­ra­tion as how you should have in­ter­pret­ed the de­c­la­ra­tion. Both good faith and rec­og­nized customs come into play here. In the example, the contract ne­go­ti­a­tions must be con­sid­ered. Since a concrete rate had always been discussed, you should have known that it was a mistake. The lessor can therefore appeal the de­c­la­ra­tion of intent.

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