How to Accidentally Create a Contract (And Why You Shouldn't)

"Sounds great, let's go with that price”. Sounds familiar? In today’s fast-moving business world, it’s easy to fire off an email or a quick Slack message that says something similar. It feels like a negotiation or casual chat. The legal reality? That one line may have just created a fully binding contract. These digital handshakes rarely contain the protective clauses you need, like limitation of liability or proper termination rights.

Digital communication moves fast, but contract formation is serious business

Here’s a quick lesson in contract formation and the one crucial step you can take to stop these mishaps.

The Four Elements of a Contract

In England & Wales, a contract doesn't need to be printed on parchment, signed in blood, or even be called a "Contract." It just needs to satisfy four basic legal elements. Once these are present in an email, a text message, or even a WhatsApp chat, you are bound:

1. Offer

One party makes a clear, definite proposal (e.g., "We will supply 50 widgets for £1,000, delivered next month."). This must be distinguishable from an "invitation to treat" (e.g., "What are your budget expectations for widgets?").

2. Acceptance

The other party agrees to the offer's terms without qualification. The simple reply, "Yes, we accept your price of £1,000 for 50 widgets," is usually enough. Crucially, if you reply, "Yes, but we need 60 widgets," that’s actually a counter-offer, which kills the original offer.

3. Consideration

Something of value is exchanged. This is usually money, but it doesn’t have to be. It could be goods, services, or even a promise not to sue. As long as both parties are giving something, this element is met.

4. Intention to Create Legal Relations

Did both parties intend for this agreement to be legally binding? In a business setting, there is a presumption that you did. It’s up to you to prove otherwise. This could be extremely difficult if the first three elements are already present.

If those four ingredients are in your email chain, congratulations - you have a legally enforceable contract, even if it has no clear governing law, no dispute resolution clause, and no limit on your liability. Terrifying, right?

Subject to Contract

So, how do you discuss a deal, agree on a price, and negotiate terms without accidentally committing your business to a half-baked contract? The answer is simple, powerful, and recognised by courts across England and Wales:

"SUBJECT TO CONTRACT"

By placing this simple, non-negotiable phrase at the top of every email, document, or memo during the negotiation phase, you are doing one crucial thing: you are expressly negating the intention to create legal relations. These three words tell the other side: "We are talking, we are agreeing terms, but we are not legally bound until the formal, final document is signed by both parties".

The Caveat (Because we're lawyers):

If you slap “Subject to Contract” on an email but then start delivering the services, accept payment, or otherwise begin performing the contract, a court may decide that your conduct overrides the written words. In law, actions often speak louder than email headers. Don’t fall into this trap.

Don't Let Your Inbox Be Your Biggest Liability

Digital communication moves fast, but contract formation is serious business. Protect your company by training your sales, procurement, and management teams to use the "Subject to Contract" shield consistently.

A properly drafted contract does more than just cement the price; it ring-fences your risk, limits your liability, and sets out clear escape routes (termination rights) should the deal go sour. Don't leave those critical protections to a hurried email exchange.

If your business relies on clear communication and robust agreements, we’re here to help you get the legal details right. We specialise in contract negotiation support and drafting documents that are legally sound, commercially practical, and utterly human