FORMAL CONTRACT DID NOT REPLACE LETTER OF INTENT

Diamond Build Ltd v Clapham Park Homes Ltd [2008] EWHC 1439 (TCC), 25 June 2008

In Diamond Build Ltd v Clapham Park Homes Ltd [2008] EWHC 1439 (TCC), 25 June 2008, Mr Justice Akenhead considered another case which ‘illustrates the dangers posed by letters of intent which are not followed up promptly by the parties’ processing of the formal contract anticipated by them at the letter of intent stage’. On the facts he held that the simple contract represented by the letter of intent had not been superseded by the formal contract which the parties had anticipated with the result that the parties’ relationship continued to be governed by the letter of intent, not by the anticipated formal contract. Further, he rejected the submission that the defendants were estopped from denying that the parties had entered into the anticipated formal contract.