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The legal opinions in this article are the author’s own, not WorldCC’s, and this is not legal advice.

When a subject-to-contract label is added to the content of a letter or e-mail, the label makes it explicitly clear that the content is not legally binding between the sender and the recipient of the letter or e-mail until a contract is executed by both parties. The “use of subject-to-contract label in negotiations effectively means that (a) neither party intends to be bound either in law or in equity unless and until a formal contract is made, and (b) each party reserves the right to withdraw until such time as a binding contract is made.”1 This reflects the general principle that even if the parties have expressed their intent to sign a contract during the course of discussion or negotiation that has a subject-to-contract label, a binding agreement will not be formed based on the mere discussions unless a contract is executed by the parties.


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