‘Subject to contract’ re-affirmed

In Joanne Properties Ltd v Moneything Capital Ltd ([2020] EWCA Civ 1541) the English Court of Appeal had to consider whether a contract had been formed even though the relevant exchange was prefaced by the words ‘subject to contract’.

The parties were trying to negotiate a compromise of a dispute between them. Moneything’s solicitor introduced ‘subject to contract’ at an early stage in the discussions and nearly all the email and phone exchanges between the parties were explicitly ‘subject to contract’.

Moneything did, however, make one offer on 19 June 2019 which was not ‘subject to contract’. There were continuing negotiations (explicitly ‘subject to contract’). These exchanges culminated in an email offer on 11 July 2019 on behalf of Joanne Properties. Moneything’s solicitor’s reply was ‘agreed’. This email exchange, too, was ‘subject to contract’.

The terms in the 11 July 2019 offer were found not to be contractually binding. Lewison LJ reviewed the authorities on the meaning of ‘subject to contract’ and its continuing effect until expressly or impliedly withdrawn.

It was not enough that the parties appeared to have reached agreement on all terms nor even that one of the parties subjectively thought that the matter was settled. The ‘subject to contract’ umbrella prevented the emergence of a legally enforceable contract. The 19 June 2019 email had not ‘recalibrated’ the discussion by withdrawing the ‘subject to contract’ umbrella.

Michael Lower

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One Response to “‘Subject to contract’ re-affirmed”

  1. ‘”Subject to contract” re-affirmed’ | Private Law Theory - Obligations, property, legal theory Says:

    […] “In Joanne Properties Ltd v Moneything Capital Ltd ([2020] EWCA Civ 1541) the English Court of Appeal had to consider whether a contract had been formed even though the relevant exchange was prefaced by the words ‘subject to contract’. The parties were trying to negotiate a compromise of a dispute between them …” (more) […]

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