In order to determine whether contractors intend to enter into a legal relationship, the Tribunal uses the contractual intent review. Such a test is objective and not subjective. It uses an objective approach to validate the applicability of the treaty. Although objective treaty theory applies in virtually every legal order in the United States, some aspects of subjectivity are nevertheless present in American law. Thus, many of the reasons why a party or party can avoid a contract, such as errors or constraints, are based on the subjective beliefs or intentions of the parties. If both parties explicitly state that they are not committed to an agreement, a court will not recognize the agreement as enforceable. The court would also refuse to find a contract if one party did not intend to be bound and the other party knew or should have known that the first party did not intend to enter into a binding agreement. There is disagreement as to whether the COMMON LAW treaties required judges to determine the subjective intent of the parties to recognize the existence of a contract or whether judges were required to view the parties` external actions and objectively determine whether a contract had been entered into. Some scholars argue that the common law has long used an objective test for contract recognition. Other scholars and writers argue that the widespread use of objective contract theory in the courts was a much more recent phenomenon, perhaps developed during the late 19th century. The distinction between objective and subjective norms sometimes arises when a person claims that he or she has spoken jokingly. The vice president of a company that made boxboards used in gambling told the Washington State Game Commission that he would pay $100,000 to anyone who found a „curved board.“ Barnes, a bartender who had bought two boards that had gone wrong some time earlier, brought one to the company`s office and asked for payment. The company refused and claimed that the statement was made jokingly (the public, at the Commission hearing, had laughed at the time of the offer).
The court contradicted and found that the $100,000 deposit should be interpreted as a means of promoting boxboards: inadequate communication can lead to a conflict over the validity of a contract and its terms. There are many cases in which the parties agree to take an approach, but they have not intended to enter into a legally binding agreement. Contract law is intended to distinguish contracts from those that do not for the purpose of establishing a legal relationship. The acute dichotomy between the objective and subjective theories of the contract should not indicate that an ordinary and daily agreement would commonly be regarded as a binding contract under one theory, but not under the other. If two parties enter into an agreement, subjectively considering being bound by the agreement, and take external actions showing their intention to be bound by the agreement, then a court that applies either subjective theory or objective theory of contract law would come to the same conclusion as the parties entered into a binding contract. Some legal experts believe that the subjective approach to contract law should be more important. Indeed, limiting the design of contracts to objective intentions alone can over-limit contract formation. However, this approach has positive and negative effects.