25.1 Meaning of ‘subject to contract’

D: WHICH CONTRACT TERMS APPLY?

25: SUBJECT TO CONTRACT (AND OTHER DENIALS OF LEGALLY-BINDING CONTRACT)

(For ‘subject to contract’ clauses see Form 25.1 [1447] onwards.)

25.1 Meaning of ‘subject to contract’

The phrase ‘subject to contract’ is often used in correspondence or draft agreements. It is generally used to mean that the terms set out in the letter or draft are not intended to be legally binding, and that legally-binding obligations will not arise until a formal, written contract is executed by the parties. Problems can sometimes arise when the phrase is used in a document, but the parties