Subject to Contract: What It Means in Singapore Law

When it comes to contracts in Singapore, it`s important to understand the meaning of “subject to contract.” This term is often used in business negotiations and indicates that the parties have not yet entered into a binding agreement.

What Does “Subject to Contract” Mean?

In Singapore, “subject to contract” means that the terms of the agreement are not final and binding until they are recorded in a formal contract. This can be a written or oral agreement, but until it has been documented and signed by both parties, it is not considered legally binding.

Why is “Subject to Contract” Important?

In business negotiations, parties may have preliminary discussions and come to an agreement on certain terms. However, until those terms are documented in a formal contract, they are not legally enforceable. The use of “subject to contract” allows both parties to continue negotiating and making changes to the terms until they are satisfied with the final agreement.

What Happens if “Subject to Contract” is not Used?

If parties fail to use “subject to contract” and they begin to act as though they have a binding agreement, they may unintentionally create a legally binding contract. This can lead to disputes and legal issues down the line if the terms of the agreement are not fully understood or if one party feels they were misled.

When Should “Subject to Contract” be Used?

“Subject to contract” should be used in any preliminary negotiations where parties have not yet finalized the terms of an agreement. This can include discussions about price, delivery, payment terms, and other important details. Until the terms of the agreement have been fully laid out and documented in a formal contract, “subject to contract” should be used.

In conclusion, understanding the meaning of “subject to contract” is crucial in business negotiations in Singapore. By clearly stating that the terms of an agreement are not yet binding until they are documented in a formal contract, parties can avoid disputes and ensure they have a clear understanding of their obligations. If you`re entering into business negotiations in Singapore, be sure to use “subject to contract” to protect your interests and ensure a smooth negotiation process.