The Virginia Business Litigation Blog
In Virginia, as in other states, there must be a “meeting of the minds”—mutuality of assent—before a contract will be formed. This concept of mutual assent requires that the parties have a common, distinct and unambiguous intention regarding the material terms of the agreement. (See Phillips v. Mazyck, 273 Va. 630, 636 (2007)). To determine whether mutual assent has been reached sufficient to form an enforceable contract, courts look to the parties’ words and actions. Before finding a meeting of the minds has been reached, courts will want to see evidence that the parties both communicated their intentions to each other. A party’s internal, private thoughts will not be considered.
The Court of Appeals decided a case last week demonstrating these principles. The case of Somers v. W.D. Campbell and Son, Inc. basically involved a situation where an individual believed an insurance company was obligated to maintain insurance on his daughter’s vehicle but the insurance company disagreed, pointing out that the parties never reached a meeting of the minds as to any such arrangement. The case was initiaed in general district court, was appealed to circuit court, and appealed again to the Virginia Court of Appeals. Each court reached the same conclusion: that without a meeting of the minds, no contract was ever formed.
The basic facts, according to the opinion, are these. In September 2018, David Somers purchased a car for his daughter Lindsay and helped her obtain insurance through Campbell Insurance, a company he had long used. Campbell obtained an insurance policy on the vehicle with Progressive. Although Lindsay was the named insured and Somers was listed as lienholder, Somers often made policy payments on her behalf due to her history of inconsistent payments. Somers declined offers from Campbell to add him as an additional insured or to put his payment information on file, preferring that Lindsay maintain full financial responsibility. Instead, Somers asked Campbell simply to protect his lienholder interest and notify him if Lindsay’s policy was 
threatened by non-payment.
In November 2019, Somers asked Campbell to find a new carrier that would allow annual payments, but no new policy was secured. Meanwhile, Progressive notified Lindsay her policy would expire on December 7, 2019, and canceled it for non-payment on that date. Campbell did not notify Somers of the cancellation. On December 31, Lindsay totaled the vehicle in an accident. That’s when Somers realized the insurance policy had been terminated. He sued Campbell, claiming that he had a contract with Campbell requiring it to “procure and maintain” insurance on the vehicle and to notify him of any issues relating to Lindsay’s policy.
The Court of Appeals agreed with the lower courts that there was no meeting of the minds sufficient to form a valid contract, so Campbell owed Somers nothing. “A valid contract requires mutual assent, or a ‘meeting of the minds,’ which ‘exists by an interaction between the parties,” the court wrote. That interaction must be “in the form of offer and acceptance, manifesting ‘by word, act[,] or conduct which evince the intention of the parties to contract.’” (citations omitted). A meeting of the minds can be shown by direct evidence of an actual agreement, or by indirect evidence of facts from which an agreement may be implied. (See Lacey v. Cardwell, 216 Va. 212, 223 (1975)). The court noted that “Ultimate resolution of the question whether there has been a binding settlement involves a determination of the parties’ intention, as objectively manifested” (quoting Snyder-Falkinham v. Stockburger, 249 Va. 376, 381 (1995)).
Here, there was no evidence of any actual or implied agreement. The court upheld the circuit court’s determination (which was entitled to a presumption of correctness) that the evidence was insufficient to demonstrate a meeting of the minds. Somers had proffered evidence that Campbell’s agent had promised to “try” to find another carrier to replace Progressive, but that discussion was insufficient to establish an enforceable contract. And Campbell was not legally required to notify Somers of the cancellation of Lindsay’s policy, since she was the sole insured.
Somers’ fall-back argument was that the parties “course of dealing” established the existence of a contract. The court rejected this argument as well. It defined “course of dealing” as “a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct” (citing Va. Code § 8.1A-303(b)) and noted that course of dealing is only relevant to explain or supplement the terms of an existing contract; it can’t be used to create a contract where none exists. (See Delta Star, Inc. v. Michael’s Carpet World, 276 Va. 524, 531 (2008)).