Solicitors’ email marked “subject to contract” confirming settlement agreement agreed insufficient to create binding contract

Baltimore Wharf SLP v Ballymore Properties Limited & Anor [2026] EWHC 312 (TCC)

The question

Does agreement by all parties by email to the terms of a settlement agreement marked “subject to contract” remove the “subject to contract” reservation?

The key takeaway

Agreements marked “subject to contract” are likely to keep that reservation unless all parties expressly agree it has been removed or such agreement is necessarily implied. Parties face a high bar in demonstrating the contrary.

The background

Baltimore Wharf SLP (Baltimore) brought proceedings against property developer Ballymore Properties Ltd (the Developer). The claim, brought in tort and pursuant to a collateral warranty, related to the collapse of a nursery roof at Baltimore Wharf in London in July 2023.

Proceedings were stayed on 1 August 2024 to facilitate settlement discussions between the parties, which culminated in the Developer sending Baltimore a draft settlement agreement on 29 August 2024. The email attaching the draft agreement, as well as the pages of the draft agreement itself, were headed “Without prejudice save as to costs and subject to contract”.

Various amended versions of the draft settlement agreement went back and forth between the parties throughout September 2024, with each still headed “subject to contract”. On 24 September 2024, the Developer’s solicitors asked Baltimore’s solicitors “if the Settlement Agreement is agreed”, Baltimore’s solicitors replied shortly after, to “confirm that the Settlement Agreement … is agreed”. Baltimore’s bank details were subsequently provided to the Developer, who in return sent back a copy of the “execution version” of the agreement, which was no longer qualified as being “subject to contract” and/or “Without prejudice save as to costs“.

The “execution version” of the settlement agreement was signed by the Developer on 25 September 2024. In October 2024, Baltimore’s solicitors clarified that the client needed the approval of its executive officers before they were able to sign the agreement. With the settlement agreement still unsigned in November, the Developer’s solicitors wrote to Baltimore stating that “settlement terms were agreed and are binding upon the parties notwithstanding that the Settlement Agreement has not been signed by your client”. Baltimore’s solicitors contested this position, stating that the agreement was non-binding until formally executed due to the existence of the “subject to contract” conditionality.

With the settlement agreement still unsigned by Baltimore, in April 2025, the Developer made an application for summary judgment/strike-out of Baltimore’s actions on the basis that the proceedings between the parties had settled.

The decision

The key issue in determining whether to grant the application was whether Baltimore’s solicitors’ acceptance of the contents of the settlement agreement by email on 24 September 2023 removed the “subject to contract” reservation.

In its consideration of whether the “subject to contract” conditionality could be considered as being removed, the court turned to the leading case Joanne Properties Ltd v Moneything Capital Ltd [2020] EWCA Civ 1541 (Joanne Properties). This case established that “Parties could get rid of the qualification of “subject to contract” only if they both expressly agreed that it should be expunged or if such an agreement was to be necessarily implied” with the requirement to show agreement/implication a high bar.

The court was satisfied that as at 24 September 2024, all parties had agreed to all terms of the draft settlement agreement headed subject to contract. However, it was found that based on the exchange of emails and the parties’ conduct prior to 24 September, there was insufficient evidence to suggest that the subject to contract reservation had been removed, including by necessary implication.

The parties’ conduct after 24 September 2024, even if admissible, was considered at best to be ambiguous and in places supportive of Baltimore’s position.

Citing Joanne Properties, the court reasoned that a reply accepting the terms of a subject to contract agreement cannot in and of itself lead to a binding agreement. It was more than likely that Baltimore changed its mind at some time after 24 September 2024 and decided not to sign the executed version of the settlement agreement. There was no implicit removal of the subject to contract reservation by them and the agreement remained subject to contract. The application by the Developer was dismissed.

Why is this important?

This case reinforces the principle established in Joanne Properties, that where parties are negotiating under a “subject to contract” umbrella, the courts will be reluctant to imply that such an umbrella has been lifted where there is ambiguity regarding the parties’ intention to do so. This emphasises the power of the “subject to contract” reservation during negotiations and that mere acceptance of a “subject to contract” agreement is unlikely to lift the reservation.

Any practical tips?

In contract negotiations, once an agreement is reached on terms, ensure the parties’ intention on the “subject to contract” condition is made clear and openly accepted by all and/or move swiftly to execution of the agreement.

In the event the agreement, once agreed, is not signed and a dispute arises, consider and take evidence of the parties’ post agreement conduct. In this case the court did not consider that it is legitimate to have regard to the parties’ subsequent conduct for the purpose of considering whether documents evidencing the contract give rise to a binding agreement. However, it did then go on to consider the events post agreement (in case it was wrong in this approach) and while it found them not to be supportive, this may still provide a worthwhile argument to pursue in a similar dispute.

Autumn 2026