

Practical Contract Law

© Law2020 LLP 2013
Consequences of a contract dispute?
Management Time
Management Time

A lot of time!
Stress
Loss of a customer
Loss of a customer

For ever!
Reputational harm
Reputational harm

rs?
me
st o
re cu
mo
s of
Lo s
And Lawyers are expensive
And Lawyers are expensive

Very expensive!
• You have a meeting with Alpha Services, a
potential supplier
• You think it is a preliminary meeting

• You have a meeting with Alpha Services, a
potential supplier
• You think it is a preliminary meeting

• You discuss the


services to be
supplied and the
price

• You shake hands and

leave
 • You have a meeting with Alpha Services, a
potential supplier
• You think it is a preliminary meeting

• You discuss the


services to be
supplied and the
price

• You shake hands and

leave

• Alpha Services then e-mails you saying:

“It is great to have entered a contract with you”

With which statement do you agree?


 There cannot possibly be a contract as it was
only a preliminary meeting

 There cannot be a contract as we have not

agreed all the terms

 The may well be a contract

There may well be a contract

There may well be a contract


ou nd
lly- b
lega
t b e
mi gh
You
What is a contract?

Offer Acceptance

Intention Consideration
 Back to the meeting
 At the meeting

 You may have both made statements
 A court might find that you have agreed certain
terms
 Back to the meeting
 At the meeting

 You may have both made statements
 A court might find that you have agreed certain
terms

 A court might identify an offer and an acceptance

 Back to the meeting
 At the meeting

 You may have both made statements
 A court might find that you have agreed certain
terms

 A court might identify an offer and an acceptance

 ‘Consideration’ is a legal term for an exchange of

promises
 The exchange of promises might amount to
consideration
 Back to the meeting
 At the meeting

 You may have both made statements
 A court might find that you have agreed certain terms

 A court might identify an offer and an acceptance

 ‘Consideration’ is a legal term for an exchange of promises

 The exchange of promises might amount to consideration

 But did you intend to be legally-bound?

 Intention?
 In a commercial setting

 There is a presumption that you intended to be
legally-bound
 You will have to rebut the intention
 Intention?
 In a commercial setting

 There is a presumption that you intended to be
legally-bound
 You will have to rebut the intention

 But surely you did not agree all the terms?

 A court may find that you have agreed sufficient
terms for a contract to come into existence
 The court may fill in the gaps
 Intention?
 In a commercial setting

 There is a presumption that you intended to be
legally-bound
 You will haveThere
to rebutmay
the intention
be
So there may be a
contract
contract
 Buy you did not agree all the terms?
 A court may find that you have agreed sufficient
terms for a contract to come into existence
 The court may fill in the gaps
 What should you have done?


MAKE IT CLEAR THAT

YOU DO NOT INTEND TO
ENTER LEGAL
RELATIONS
 These discussions are subject to contract


We do not intend to enter a contract until we
have signed a final written agreement
 These discussions are subject to contract


We do not intend to enter a contract until we
have signed a final written agreement

Min
ut
Me es of
etin
g
‘Su
bje
ct t
o Con
trac
t’
 These discussions are subject to contract


We do not intend to enter a contract until we
have signed a final written agreement

e -mail
low -up er
Fol a ll oth e
and ondenc
esp
corr tr act’
to Con
bj ect
‘Su
 These discussions are subject to contract


We do not intend to enter a contract until we
have signed a final written agreement

DRAFT
CONTRACTS

‘Subject to Contract’
 These discussions are subject to contract


We do not intend to enter a contract until we
have signed a final written agreement

ALL
PRE
CON -
T
DOC RACT
UME
NTS
‘Sub
ject t
o Co
ntrac
t’