“Subject to Contract” not to be diluted
‘subject to contract’ proposals remain in negotiation until a formal contract is executed. Lord Denning MR said: ‘for over a hundred years, the courts have held that the effect of the words ‘subject to contract’ is that the matter remains in negotiation until a formal contract is executed’ It was vital that the meaning and effect of the phrase must not be diluted. As to the required memorandum, it must contain a recognition of the existence of the prior contract and must state its terms.
Lord Denning MR said: ‘These courts are masters of their own procedure and can do what is right even though it is not contained in the rules.’
Stamp LJ said that a memorandum must, to satisfy the section, recognise the contract.
Lord Denning MR, Stamp LJ, Scarman LJ
 Ch 146
Law of Property Act 1925 40
England and Wales
Approved – Clearbrook Property Holdings Limited v Verrier ChD 1974
The issue was whether a caution registered in the Land Registry by a plaintiff purchaser who was claiming specific performance of an agreement for sale should be vacated. The effect of the vacation of the caution was that the plaintiff’s claim for . .
Incorrect – Law v Jones 1974
A ‘subject to contract’ document might be evidence of an antecedent or oral contract and satisfy section 40 of the Law of Property Act 1925 if the stipulation was later waived. A memorandum or note must, if it is to be effective, not only state the . .
Cited – Carlton Communications Plc, Granada Media Plc v The Football League ComC 1-Aug-2002
The applicants sought a declaration that they had not provided guarantees to support a contract between a joint venture company owned by them, OnDigital, and the respondent to screen football matches. The company had become insolvent.
Held: . .
Cited – Irani v Irani and others ChD 24-Jul-2006
The deceased had effectively settled his divorce ancillary relief proceedings by promising to leave a property by will to to his former wife, the claimant. He signed a document which appeared to be intended to give effect to his undertaking, but the . .
Cited – North Eastern Properties Ltd v Coleman and Another CA 19-Mar-2010
The appellants challenged specific performance orders obliging them to complete the purchase of apartments, saying that the contracts had not complied with the 1989 Act, and that their repudiation of the contracts had been accepted. The contracts . .
Cited – Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd and Another ComC 21-Jan-2011
The defendants sought to set aside orders allowing the claimants to serve proceedings alleging repudiation of a charterparty in turn allowing a claim against the defendants under a guarantee. The defendant said the guarantee was unenforceable under . .
Cited – Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd and Another CA 9-Mar-2012
The court was asked ‘whether a contract of guarantee is enforceable where contained not in a single document signed by the guarantor but in a series of documents duly authenticated by the signature of the guarantor. It is common in commercial . .
Cited – Nugent v Nugent ChD 20-Dec-2013
The court was asked whether the court has, following the the 2002 Act, an inherent power to order the cancellation of a unilateral notice registered against a title registered under the 2002 Act and, if so, in what circumstances, and how, such a . .
Lists of cited by and citing cases may be incomplete.
Land, Contract, Litigation Practice
Updated: 02 November 2021; Ref: scu.183017