The Technology and Construction Court (TCC) has recently revisited an issue that arises often in construction disputes: when do settlement negotiations become a binding agreement?
In Baltimore Wharf SLP v Ballymore Properties Ltd and WSP UK Ltd [2026] EWHC 312 (TCC), the court considered whether a legally binding settlement had been reached during “subject to contract” negotiations. The court refused to find a binding settlement, emphasising just how strong the “subject to contract” protection remains unless it is clearly removed.
Background
In July 2023, the roof of a nursery at Baltimore Wharf collapsed. Baltimore Wharf SLP (the claimant) brought proceedings against Ballymore Properties Ltd (the defendant) under a collateral warranty and in tort, claiming the collapse resulted from defects in the connection between steel roof beams and the concrete frame. Damages were estimated at over £2 million.
Ballymore brought a Part 20 claim against WSP UK Ltd (the third party).
Court proceedings were issued in May 2024 and later stayed to allow for settlement discussions.
The parties entered settlement discussions, and every draft and email was marked “Subject to contract”.
On 24 September 2024, the claimant’s solicitor said the settlement agreement with the latest amendments was “agreed”.
Ballymore and WSP signed the execution version of the agreement.
The claimant did not sign, and later indicated it still needed to review the document.
Ballymore and WSP argued that settlement had already been reached and asked the court to strike out the claim.
The Issue
The core question for the court was:
Did a binding settlement come into existence on 24 September 2024, despite the negotiations being conducted “subject to contract”?
To succeed, Ballymore and WSP had to show that the “subject to contract” protection had been expressly removed, or necessarily implied to have been removed (The latter of which is hard to do).
The Court’s Decision
The court held that no binding settlement was reached.
Key reasons:
- “Subject to contract” still applied.
All drafts the parties were working from still carried the subject‑to‑contract wording. The court found no express or implied agreement to remove it.
- The claimant’s email was not enough.
Confirming that terms were “agreed” did not overcome the subject‑to‑contract protection.
- Signing matters
Because the subject‑to‑contract label remained in place, the claimant was free to change their mind until they signed the agreement.
- Parties’ conduct was ambiguous
Actions such as sharing bank details or circulating a Tomlin Order draft did not amount to a clear intention to be legally bound.
Why the case matters
This judgment confirms that:
- “Subject to contract” is a strong legal safeguard.
Parties will not be bound unless this label is clearly lifted.
- Agreement in principle is not a final settlement.
Even if everyone agrees the terms, the deal is not binding until the parties say they want to be bound or they sign.
- Clear communication is essential.
If a party wants the settlement to become binding before formal execution, it must state that the subject‑to‑contract label no longer applies.
Practical tips for clients
Treat “subject to contract” as meaning nothing is final.
Do not rely on informal emails or verbal agreements during negotiations.
Ensure settlement agreements are formally signed by all parties.
If you intend to be bound before formal signatures, this must be stated expressly.
Ask your legal team to confirm when a settlement has legally “crossed the line” into a binding agreement.
Key takeaway
Until all parties clearly agree otherwise, “subject to contract” keeps the door open and allows parties to walk away.