LETTER OF INTENT DID NOT CREATE A CONTRACT

Jarvis Interiors Ltd v Galliard Homes Ltd [2000] BLR 33

In Jarvis Interiors Ltd v Galliard Homes Ltd [2000] BLR 33 the Court of Appeal held that a document entitled ‘Contract Preliminaries’ which stated that the ‘contract will be executed as a deed under seal’ did not give rise to a contract which was enforceable between the parties. The stipulation was treated as analogous to a ‘subject to contract’ provision in a contract. Nor did the sending of a letter of intent suffice to create a contract between the parties because it too was subject to the requirement that a formal contract be concluded. The fact that no concluded contract had been entered into between the parties meant that the defendants could not rely on an arbitration provision in the alleged contract between the parties in order to stay the claim brought by the claimants.