Key Points:
What you thought were pre-contractual negotiations could
amount to a binding contract regardless of your intentions, even
where no formal contract has been signed. Two recent cases have
found binding contracts to exist in relation to leases and sale
contracts without the parties signing formal
documents.
Email exchanges often result in the parties reaching agreement
in an informal way about essential contractual terms. To avoid
being bound by a contract which you thought you could still walk
away from, you need to clearly and consistently communicate the
intention not to be bound unless and until a formal agreement is
entered into.
The cases outlined below send a warning to any contracting party
that using phrases such as "subject to contract" may not
be enough to overcome an intention to be immediately bound by the
terms of an informal agreement.
