Negotiations often produce a document before the formal contract, such as a heads of agreement or an expression of interest. Whether it binds depends on the parties' intention, judged objectively.
Masters v Cameron identifies three categories. In the first, the parties have agreed all terms and intend immediate binding, with any later document merely restating the agreement. In the second, they are bound at once but defer performance until a formal document is executed. In the third, they do not intend to be bound at all until the formal contract exists. Later authority recognises a fourth category, where the parties are bound to proceed on agreed terms in the meantime while they negotiate a formal contract.
For land the writing and signature requirement in section 126 of the Instruments Act 1958 sits over this, so even a binding intention still needs a signed writing to be enforceable.
CMK Legal's property and conveyancing team can help with this.
Labels such as subject to contract point towards category three, but the words are not conclusive and the whole of the conduct is examined. A holding deposit or a signed note can move an arrangement into a binding category earlier than a party expects.
Law referenced: Masters v Cameron (1954) 91 CLR 353; Instruments Act 1958 s 126.