It depends on the circumstances: the label subject to contract strongly indicates no binding commitment until a formal contract is signed, but it is not conclusive, and conduct such as starting and varying the work can waive it so that a binding contract arises

The words are a strong sign that the parties do not yet intend to be bound, but in construction they are not conclusive. The label came from land sales, where no binding contract arose until a formal contract was exchanged, but carried into construction it does not give the same certainty. Whether a binding contract has come into being turns on what the parties said and did, judged objectively, not on the label alone. The Supreme Court has held that where work begins under a subject to contract or letter of intent arrangement and the parties then perform and vary the terms, their conduct can waive the requirement for a signed contract and a binding contract arises. In other cases the label has been given full effect, so that no liability arose until a formal contract was entered into. The safe course is to keep formal execution a genuine precondition and to act consistently with it.