In our recent post (Are Verbal Contracts A Thing And If So Can There Be Consequences) we consider the risk attendant on informal messaging and the risk of forming contracts unwittingly before the important standard terms can be introduced.
We are looking at the significance of the words “subject to contract” following questions from several clients from diverse industries, trades and professions whilst in the process of drawing up their standard terms, and relating to their making contracts with their customers and clients.
We have been able to point them to the recent decision in Baltimore Wharf SLP v Ballymore Properties Ltd [2026]
SUBJECT TO CONTRACT
Baltimore (owner) made a claim against Ballymore (developer) after the roof of a nursery collapsed.
The developer Ballymore, sued the structural engineer WSP UK looking to pass on the liability.
The engineers offered to settle and every page of a draft settlement agreement had the words “subject to contract” imprinted.
Terms of a settlement agreement were negotiated and a final version without the words “subject to contract” was sent out for signing but the owner Baltimore refused to sign.
DID THEY READ OUR LAST POST
The developer Ballymore, asserted that a legally binding agreement had been reached regardless of non-signing.
The words “subject to contract” had been left out and all parties had agreed the settlement terms.
The owner Baltimore disagreed since up to that point everything was marked “SUBJECT TO CONTRACT”.
They said that no contract could be reached until everyone signed.
This didn’t sit well with the developer Ballymore who said that as there was no “subject to contract” on the last document, therefore the block on contract formation fell away and a contract had been made.
As they couldn’t agree it was left to the Court to rule on the dispute.
WHAT HAPPENED
It was Held, that there was no contract, and that the block on making a contract remained.
WHY
Subject to Contract protects all discussions unless all parties say otherwise which has to be in one of two ways.
THE TWO WAYS
Either it is expressly removed by everyone agreeing it is removed or it is removed by conduct implying it was abandoned.
One example of this could be that parties start to perform their obligations.
In this case though neither of these happened and so subject to contract meant what it said.
WE RECOMMEND
To avoid entering into a contract unwittingly, we advise our clients to say expressly on emails and messages, that the matter is subject to contract until formal contracts are signed and exchanged.
IN APPRECIATION
Our thanks to John Ballard of The Website Specialists for their refresh of our website trending now ([email protected])
ALEXANDER BUSINESS LAW SOLUTIONS are lawyers for business www.alexanderbls.com
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