Negotiating contracts: why ‘subject to contract’ matters

By Chris Smith

The importance of creating clarity of intentions during the negotiation process of any contract has been reiterated in a recent decision by the High Court.

The regulation of negotiating contracts has long centred on the concept of the parties’ intentions and whether one or both are intent on creating a legal relationship. It is important for each party to establish and set out whether the suggested terms of a contract are capable of being accepted or whether they are merely the first step in the negotiation process.

The recent decision in Newbury v Sun Microsystems [2013] EWHC 2180 (Newbury case) not only ruled on the intention of the parties generally, but the specific wording that was used in correspondence when the parties were negotiating the terms of the contract…

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