‘Without prejudice and subject to contact’ is a phrase often used in civil dispute negotiations to indicate that the settlement proposals are confidential and cannot be used as evidence in court (i.e. without prejudice) and do not constitute a binding agreement until a final contract is signed (i.e. subject to contract). An email stating ‘it is agreed’ in reply to a draft settlement agreement, as shown in the case of Baltimore Wharf SLP v Ballymore Properties Ltd & Another [2026] EWHC 312 (TCC), will not be sufficient to remove the protection offered by ‘subject to contract’ and to tie the parties to executing a legally binding contract.
Baltimore Wharf SLP v Ballymore Properties Ltd & Another [2026] EWHC 312 (TCC)
Background
The Claimant brought a claim against the Defendants for the collapse of a nursery roof at Baltimore Wharf in London on 15 July 2023. The court made a Consent Order on 1 August 2024 staying the proceedings until 1 October 2024 to allow settlement discussions.
The parties negotiated settlement and the draft agreement was labelled ‘without prejudice save as to costs and subject to contract’. On 24 September 2024, one of the Defendant’s solicitors asked the Claimant’s solicitors whether the settlement agreement was agreed and the Claimant’s Solicitors replied that ‘I confirm that the Settlement Agreement with WSP’s amends is agreed’. An execution version of the settlement agreement without any ‘subject to contract’ heading was prepared and circulated. The Defendants executed the settlement agreement but not the Claimant, who indicated that it was looking to sign the same but never did. The Defendants subsequently brought applications for summary judgment against the Claimant claiming that the proceedings had been settled.
Decision
The court dismissed the Defendants’ applications as the Claimant had a reasonably arguable defence. The Claimant’s action did not amount to an implicit removal of the ‘subject to contract’ reservation:-
- Once negotiations begin with ‘subject to contract’, that condition carries through all negotiations and parties can only remove that by expressly agreeing so or if such an agreement was to be necessarily implied;
- There was nothing to show that the use of the ‘subject to contract’ heading in the travelling draft settlement agreements was abandoned by the Claimant, who was ‘at best ambiguous’;
- The parties’ agreement to extend stays of proceedings was inconsistent with them believing settlement had been reached. They could have sent a letter to the court to state that the matter had been settled and a Tomlin Order would follow; and
- It was more than likely that the Claimant changed its mind at some point after 24 September 2024 and decided not to execute the final draft of the settlement agreement and it was not too late for it to do so.
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