Without prejudice and subject to contract
Without prejudice and subject to contract

The following Property practice note provides comprehensive and up to date legal information covering:

  • Without prejudice and subject to contract
  • Subject to contract
  • Without prejudice
  • Exceptions
  • Waiver
  • Discriminating use

Subject to contract

If a party who strikes a bargain wishes to make it clear that it does not intend to enter into a binding contract until a formal contract has been exchanged, it must make it clear that the agreement is subject to contract. The most common method for doing this is to note the term on all correspondence relating to the matter. This is advisable even though the requirements of Law of Property (Miscellaneous Provisions) Act 1989, s 2 mean that various formalities must be observed to create a valid contract for the sale of land, or of any interest in land.

A party seeking to rely on negotiations, which had remained expressly subject to contract, in order to found a proprietary estoppel must demonstrate that:

  1. the other party had created or encouraged an expectation or belief that it would not withdraw from the agreement in principle, and

  2. it had relied on that belief or expectation

In Haq, the claim for entitlement to a new lease failed where the tenant of business premises had carried out works to expand into adjoining premises on the basis of a temporary licence, while negotiations for a lease of those additional premises remained subject to contract. The claimant could not show reliance on the promise of a new lease because works commenced before the alleged promise was made.

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