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Valparaiso Univ. Law School

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Thursday, February 24, 2005

Magic words don't work

While putting the phrase "subject to contract" in a proposal will usually defeat the creation of an executory contract, one will still be found if the subsequent conduct of the parties demonstrates that they have concluded the deal, according to a recent decision by Britain's Queen's Bench.

In the case, both plaintiff and defendant signed a proposal for cleaning services which incorporated plaintiff’s standard terms, but also said it was "subject to contract."  Except in a very strong and exceptional case, held Justice Field, those words prevent an executory contract from coming into force.  But that standard was met in the case, he ruled, because because both parties subsequently engaged in the activities specified by the contract: the cleaner cleaned and the buyer paid.   The Rugby Group Ltd. v. Proforce Recruit Ltd. (QBD Feb. 2, 2005).

Bahamian lawyer Errol Niles has some thoughts on the case here.

http://lawprofessors.typepad.com/contractsprof_blog/2005/02/magic_words_don.html

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