The perils of thinking you’ve done the deal (or not) – two contrasting TCC decisions

In recent months, the Technology and Construction Court (TCC) handed down two seemingly different decisions on cases that both considered the use and impact of the term “subject to contract” in the context of negotiations ahead of an agreement (to include when the phrase can be considered to have been withdrawn).

In both Baltimore Wharf SLP v Ballymore Properties Ltd [2026] EWHC 312 (TCC) (16 February 2026) and GMC Utilities Group Ltd v Sumitomo Electric Industries Ltd [2026] EWHC 885 (TCC) (16 April 2026), the TCC grappled with deciding whether the parties had entered into binding agreements following the use of “subject to contract” reservations during correspondence.

On first look, the results of these cases appear to be at odds with each other. One decision seems to abide by the established precedent that once negotiations are qualified with a “subject to contract” reservation, that condition remains steadfast until the parties expressly agree it has been removed or the removal is otherwise necessarily implied (the latter presenting a high threshold to beat). The other case found that the “subject to contract” condition in question had been waived simply by its absence in later connected correspondence.

If the commercial and legal realms crave one thing, it is certainty. In a world where discussions subject to reservations are the norm, and agreements are crafted with intentional caveats, how much protection does a “subject to contract” umbrella actually offer to negotiating parties? And, at what point does it become a hindrance to negotiations made and otherwise thought to have resulted in an agreement settled in good faith?

Baltimore Wharf v Ballymore Properties

In Baltimore Wharf v Ballymore Properties, the parties had been in negotiations with respect to a dispute surrounding the collapse of a nursery roof. However, the issue before the TCC was limited to a summary judgment application as to whether or not the parties had a binding settlement agreement following correspondence.

Background

Having been brought into the claim, the Part 20 Defendant, made an offer to the Defendant under the heading “Without prejudice save as to costs and subject to settlement agreement” in response to the Defendant’s assertion that the Part 20 Defendant should contribute to any such settlement. Proceedings were stayed and further discussions between the parties took place.

The Defendant’s solicitor emailed the Claimant and the Part 20 Defendant’s solicitors under the heading “Without prejudice save as to costs and subject to settlement agreement,” with a draft Settlement Agreement (which also marked “Subject to contract and without prejudice save as to costs”) that contained what they understood to be the agreed payment amounts from each party to settle the dispute. The draft Settlement Agreement travelled between the parties while comments were considered and amendments made, each marked with and attached to emails under the same “Subject to contract and without prejudice” heading. In a final round, the Part 20 Defendant indicated agreement to some minor final amendments made by the Defendant but there was no immediate response by the Claimant.

The Defendant sent a chaser with all parties in copy, but addressed to the Claimant’s solicitor, seeking confirmation as to whether the Settlement Agreement was agreed. This email was sent under the heading “Without prejudice, save as to costs”. The Claimant’s solicitor confirmed agreement by return email. The Defendant’s solicitor then sought the Claimant’s bank account details for inclusion in the Settlement Agreement and advised they would then circulate the engrossment (under a “Without prejudice save as to costs” heading). An “execution version” engrossment was circulated between the parties and the “subject to contract” and “without prejudice” headings were removed from the emails.

Both the Defendant and Part 20 Defendant executed the document. However, the Claimant appeared to have developed cold feet and did not proceed with execution. The Claimant’s solicitor then indicated its client needed executive review before signing off, and matters dragged on.

In the end, the Defendant’s solicitor asserted to the other parties that the Settlement Agreement was agreed and binding, the absence of the Claimant’s signature notwithstanding. However, the Claimant maintained that the draft settlement, having been marked “subject to contract” was clear in its communication that no binding Settlement Agreement would have effect until all parties formally executed it. The TCC agreed - the Defendants had failed to clear the high bar needed to show that the “subject to contract” qualifier was removed by necessary implication.

GMC Utilities v Sumitomo

In GMC Utilities v Sumitomo, the question before the TCC was again whether the parties had made a binding agreement following correspondence marked “subject to contract”.

Background

In this case, a dispute arose following delay to practical completion. Sumitomo, the Defendant main contractor, had engaged GMC as sub-contractor to carry out the installation and associated civil works in relation to onshore cable work as part of a bigger undersea electricity interconnector construction project.

Following delay, on 28 October 2024, Sumitomo called on a performance bond on the basis that GMC had not fulfilled its obligations due to an alleged failure to meet the “taking-over” date. In order to avoid payment under the performance bond, it was agreed in principle that GMC would pay the demanded sum (approximately £3.9m) directly into an escrow account, pending final agreement between the parties.

The parties then continued negotiations via emails and letters around the approach to the escrow payment and the Escrow Agreement (which included details of when and how the escrow sum would be paid out and what would happen if there was no agreement by a specified date).

In a final round of exchanges:

1.  A detailed counteroffer was made by GMC’s solicitors Michelmores on 7 November 2024 under cover of an email headed “Without prejudice save as to costs and subject to contract”.
2. On 8 November 2024:
   1. Sumitomo’s solicitors’ (Watson Farley & Williams) responding email at 12:37 was headed “Without prejudice save as to costs” and confirmed acceptance of and re-attached the counter-offer terms;
   2.  Michelmores then replied at 13:54 under the same heading “Without prejudice save as to costs” to provide requested information on when the funds would be placed in the escrow account;
   3. Watson Farley & Williams sent an email in response at 15:16, with no “without prejudice” or a “subject to contract” heading, to confirm agreement to the payment timeline suggested by the Michelmores.

Shortly thereafter, the parties turned to the Escrow Agreement itself and carried on negotiating it under a “subject to contract” reservation. The Escrow Agreement included conditions which directed the escrow agent as to the circumstances in which it might transfer the funds to GMC or Sumitomo from the escrow account – this would be following an agreement between the parties, or a decision by an adjudicator, arbitrator or a court. If none of these events had happened by 7 March 2025, the escrow sum was to be paid out to Sumitomo. The Escrow Agreement was subsequently executed in December 2024.

Where the parties disagreed was whether the letter from Watson Farley Williams to Michelmores of 12:37 on 8 November 2026 (2a above, the Letter) comprised a binding agreement. GMC’s position was that the Letter was not binding as it was “merely a step in negotiations being undertaken "subject to contract"”. GMC was, of course, also of the view that the sums should not automatically be paid to Sumitomo following the absence of an agreement or formal decision after the specified date.

It was held by the TCC that the Letter was indeed binding and that the “subject to contract” reservation had fallen away by necessary implication, confirmed by the fact that the Letter did not contain the heading “subject to contract”, nor did it appear on any subsequent correspondence.

Conclusion

In both cases, the TCC considered the conduct of the parties to determine whether they had intended to enter into binding agreements at the time. In Baltimore Wharf v Ballymore, the TCC noted that the Defendant and Part 20 Defendant did not show surprise when they were advised that the Claimant’s client required an executive review, which would have been the expected response if they had truly believed a final settlement had been agreed. In GMC Utilities v Sumitomo, the TCC noted that the GMC had returned correspondence and removed the “subject to contract” heading but also moved to provide the undertaking and pay the agreed funds into the escrow account, as per the agreement – Sumitomo was fully aware that this was the case.

The concept and meaning of “subject to contract” have been considered in the Courts thoroughly before now, with various cases having contemplated the intended role of the phrase and its place within negotiations en route to agreement. These two recent decisions simply serve as a reminder of the caution and consciousness that parties must have when they pursue negotiations under the umbrella of such being “subject to contract”.

The Courts will consult the conduct of the parties to determine whether the parties intended to remain subject to the “subject to contract” umbrella or if they had moved on from the negotiation stage to agreement – substance over form. If nothing else, the results of these cases offer a warning that negotiating parties should remain vigilant for any gap between the substantive agreement they understand has been agreed and subsequent communications.