Fri, Oct

Subject to contract


Subject to contract. In this situation, a formal contract has yet to be signed. However, the main provisions have probably been agreed during negotiations.

An agreement, which is subject to a formal contract, is only a provisional agreement and is not at all binding. The question of "main terms" and "details" does not arise. The provisional agreement indicates that each party seems to have the same ideas but the agreement itself is only one step in the negotiations for a firm contract. It seems that each party has no intention to be bound until the final contract has been signed. However, in one shipping case, Howard Marine v. Ogden, 1978, the words "subject ... to charterparty..." justified a contract coming into existence, despite no charterparty having been signed. The reason was that the barges, which were the subject of the charter, were delivered, although they were then found to be unsuitable.