Contract

A contract is any legally-enforceable promise or set of promises made between parties. In the civil law, contracts are considered to be part of the general law of obligations. This article describes the law relating to contracts in common law jurisdictions.

"Subject to" contracts

If a contract specifies "subject to contract", it may fall into one of three categories (Masters v. Cameron (1954) 91 CLR 353):

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• The parties are immediately bound to the bargain, but they intend to restate the deal in a formalised contract that will not have a different effect; or
• The parties have completely agreed to the terms, but have made the execution of some terms in the contract conditional on the creation of a formalised contract; or
• It is merely an agreement to agree, and the deal will not be concluded until the formalised contract has been drawn up.

If a contract specifies "subject to finance", it imposes obligations on the purchaser (Meehan v. Jones (1982) 149 CLR 571):

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• The purchaser must seek finance; and
• When offers of finance arrive, the purchaser must make a decision as to whether the offers of finance are suitable.

Once again, there is an element of good faith involved.

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This may also refer to contingent conditions, which come under two categories: condition precedent and condition subsequent.

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Conditions precedent are conditions that have to be complied with before performance of a contract.

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With conditions subsequent, parties have to perform until the condition is not met.

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Failure of a condition does not void the contract, it is just regarded as voidable.

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