A contract is a legally enforceable agreement by which the parties assume obligations towards one another, allocate identified risks and establish the legal consequences that are to follow from performance, defective performance or non-performance. That proposition requires some care because neither the existence of a commercial arrangement nor the presence of a document entitled "Contract" is conclusive. Commercial parties may reach an understanding that they do not yet intend to carry legal force; conversely, they may become legally bound through correspondence and conduct even though the formal instrument contemplated during negotiation remains unsigned. The legal inquiry is therefore directed to the substance of the parties' dealings, assessed objectively, rather than to the label placed upon a document or the uncommunicated intention held by an individual participant.

In construction, the contractual relationship commonly performs several functions at the same time. It identifies the work to be carried out and the price or valuation machinery by which payment is to be calculated; it allocates responsibility for design, access, information, ground conditions, delay and defects; it prescribes the procedures by which instructions, notices, applications and assessments are to be made; and it defines the remedies available if an obligation is not performed. Those functions explain why a formation dispute cannot safely be treated as an abstract question about whether the parties had reached "a deal". A finding that some contract existed may leave unresolved whether the contractor accepted a design obligation, whether liquidated damages were incorporated, whether liability was capped, or whether an adjudication provision formed part of the bargain. In many claims, the commercially decisive question is not whether any contractual relationship existed, but which terms governed the work at the material time.

The formation inquiry must accordingly distinguish three matters that are often collapsed in project correspondence: first, existence, which concerns whether the dealings had acquired contractual force; secondly, time, which fixes the date upon which that occurred; and thirdly, content, which identifies the express or incorporated terms upon which the parties became bound. A conclusion on one matter does not answer the others, since a limited letter of intent authorising preliminary works until a stated date or financial limit may constitute an enforceable interim contract without establishing that the full building contract had been concluded. If work continued after its expiry, the later period requires separate analysis rather than an assumption that the interim arrangement continued indefinitely or that the latest draft automatically governed the parties.

The distinction also affects the legal basis upon which money may be claimed. Where an enforceable contract governs the work, entitlement and valuation ordinarily depend upon that contract. Absent a concluded contract, a party may have to rely upon a non-contractual claim for the reasonable value of a benefit conferred, subject to the facts and the applicable legal principles. That difference may alter the measure of recovery, the available contractual remedies and the allocation of risks that would otherwise have been addressed by negotiated terms. A claims specialist who starts with valuation, without first establishing the juridical basis of the work, may therefore calculate a claim under provisions that never became binding.

For analytical purposes, a construction contract should be understood as a legal relationship evidenced by the parties' communications and conduct, rather than as a single piece of paper. Where an executed instrument exists, it will usually provide the most direct evidence of the bargain, but the formation record may also include the invitation to tender, tender qualifications, post-tender clarifications, a letter of intent, meeting minutes, revised drafts, instructions, payment records and agreed changes. Chronological review must determine the legal effect of that record while resisting the hindsight created by later performance or dispute. Later behaviour may provide powerful evidence that some arrangement existed, but it does not permit a tribunal to invent obligations upon which the parties never agreed.

English law approaches contractual formation objectively, so the relevant question is not whether a director, project manager or quantity surveyor privately believed that a contract had been concluded, but whether the parties' outward communications and conduct would convey an intention to enter legal relations on sufficiently settled terms. This objective method protects the reliability of commercial dealings because legal obligations cannot sensibly depend upon undisclosed reservations. It also places considerable weight upon the project record: a later witness statement asserting that signature was always considered essential may carry little force if the contemporaneous correspondence, payment practice and agreed variations demonstrate that both parties proceeded on a different basis.

Agreement is frequently analysed through the language of offer and acceptance, which provides a sound means of identifying the proposal said to have been accepted and the terms attached to it. The analysis is not, however, a mechanical search for two documents bearing those labels. A tender may contain qualifications; a purported acceptance may introduce different terms and operate as a counter-offer; a purchase order may refer to standard conditions that conflict with those accompanying the tender; and performance may begin while the documentary exchange remains incomplete. In a transaction that has been wholly or partly performed, the existence of agreement may emerge from the parties' combined correspondence, oral exchanges and conduct, even where it is artificial to isolate a single moment of offer and acceptance. This method does not lower the legal standard; it recognises that commercial agreement may be manifested by a course of dealing rather than a perfectly ordered exchange.

The parties must also intend their agreement to create legal relations, an intention that will ordinarily be assessed from the language used, the degree of commitment expressed, the subject matter of the arrangement and the conduct that followed. A document described as a letter of intent may contain a present authorisation to carry out defined work and a promise to pay for it, while reserving the wider contract for later agreement. In that situation, the title "Letter of Intent" does not prevent the document from having contractual effect within its stated scope. At the other end of the scale, correspondence that records an aspiration to proceed, expressly preserves ongoing negotiation and disclaims legal commitment may show that no immediate obligation was intended. The legal effect depends upon the instrument as a whole and the circumstances in which it was issued.

Certainty and completeness form a further control because a court cannot enforce a bargain if the obligations said to have been assumed cannot be identified with sufficient certainty, nor may it construct for the parties the agreement that their negotiations failed to produce. It does not follow that every commercial detail must be settled before any contract can exist. The proper inquiry is whether the parties had agreed those matters that they regarded, or that the law requires, as essential to the formation of a workable agreement. An unresolved matter may prevent formation where the parties treated it as a precondition to commitment; the same matter may be left for subsequent agreement where the parties intended to become bound immediately and the remaining issue was subsidiary. The importance of the subject matter may provide evidence of intention, but there is no rule that every economically material term must invariably be finalised before a binding contract can arise.

Consideration belongs within the formation analysis, but its governing rules are examined in Lesson 4. At this stage, the claims specialist should identify the exchange alleged by each party and avoid assuming that every assurance made during performance is contractually enforceable. A later promise to pay more for existing work requires separate analysis under the consideration and variation rules addressed in that lesson. The present enquiry remains directed towards the agreement, intention, certainty and formality disclosed by the project record.

Formality and conditionality must finally be addressed on their own terms because parties are free to stipulate that an agreement will not bind them until a stated event occurs, such as execution, exchange, approval by a board or completion of specified schedules. Ordinarily, the expression "subject to contract" indicates that negotiations have not yet produced an immediately binding agreement, notwithstanding consensus on much of the substance. Sufficiently clear communications and conduct may later waive that condition, but the conclusion must rest upon evidence that the parties objectively elected to proceed without it. Continued negotiation, administrative delay in arranging signature or the commercial pressure to maintain progress will not, without more, answer that question.

The construction industry presents a recurring formation problem because the programme may require mobilisation before the parties have completed their legal negotiations. Procurement teams often respond by issuing a letter of intent, early works instruction or limited notice to proceed, intending to preserve the project timetable while the full conditions are settled. That commercial solution may create substantial legal uncertainty if the interim document does not define the authorised scope, payment basis, duration, expenditure limit, termination rights and relationship with the proposed main contract. Once work has begun, operational decisions tend to outpace the legal record: additional work is instructed, the original cap is exceeded, the expiry date passes, and payments continue without any express agreement as to the basis upon which the expanded performance is taking place.

A letter of intent must therefore be analysed according to its terms rather than treated as a recognised contractual category with a single legal effect. Depending upon its language, it may amount to a statement of present intention which leaves each party free from contractual commitment. A different instrument may create a limited contract governing specified preliminary activities while expressly withholding agreement on the full project. Another may record a complete agreement whose formal execution remains administrative, although that conclusion will be difficult where execution is expressly made a condition of effectiveness. The same title can thus be applied to instruments with materially different effects, and a claims analysis that classifies the document by name rather than content is liable to fail.

Performance provides evidence of contractual intention because commercial parties do not ordinarily undertake and accept extensive work without some legal basis, although the weight of that evidence depends upon the circumstances. If the work corresponds with an agreed scope, the price has been settled, payment follows that price and both parties implement later changes as contractual variations, the conduct may support a finding that they considered themselves bound. Conversely, performance pending anticipated execution may be equally consistent with an interim arrangement or non-contractual request where fundamental matters remain disputed, particularly provisions dealing with liability for delay, defects or consequential loss. The tribunal must decide what the conduct signifies in the context of the negotiations; it cannot treat physical performance as an automatic substitute for agreement.

Expiry and financial limits require particular attention because they may mark the boundary of the only contract that the parties indisputably made. If an interim contract authorises work until 30 June or up to £250,000, work undertaken within that period and limit may have a clear contractual basis, whereas later or excess work may not. The expiry does not necessarily bring every legal relationship to an end, since later communications and conduct may establish a new agreement, extend the interim contract, vary its limit or demonstrate acceptance of the wider terms; none of those consequences follows automatically from continued progress. Each proposed basis must be tested against the evidence, and the analyst must identify the date, terms and consideration supporting the later agreement.

The content of a contract inferred from conduct must be approached with the same discipline as its existence. It is rarely coherent to conclude that the parties became bound to perform a substantial project while leaving every allocation of risk to implication, yet it may be equally wrong to incorporate the whole of an unsigned draft merely because work continued. The drafting history must reveal which conditions were agreed, which remained contested, whether an order of precedence was settled, and whether the parties acted upon particular provisions. A payment made under an agreed schedule may support incorporation of that schedule without proving acceptance of an unrelated liability cap. An agreed programme revision may evidence a contractual relationship without determining whether liquidated damages were incorporated. The evidence must be connected to the term for which it is relied upon.

For a claims specialist, the formation exercise is consequently an evidential reconstruction governed by legal principle. The chronology should record each alleged offer, qualification, acceptance, counter-offer, reservation, instruction, payment and act of performance, together with the contractual consequence advanced for it. Evidence of the communicating individual's authority may require examination, as may the parties' treatment of conditions concerning signature or approval. The resulting opinion should present the strongest competing analyses before reaching a conclusion, because formation disputes commonly permit more than one plausible account of the same conduct. An opinion that acknowledges the evidential difficulty, identifies the decisive documents and explains why one analysis is preferable is more useful than a categorical answer unsupported by the contractual record.

4.1 Factual and contractual setting

The leading construction authority is RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 14. RTS was engaged to design, supply, install and commission automated production equipment for Müller. Because the project programme required work before the conditions and technical schedules were finalised, the parties intended to enter a detailed written contract while permitting early progress. A letter of intent issued on 21 February 2005 authorised commencement on an agreed price of £1,682,000 and contemplated completion of a contract based upon detailed standard conditions within four weeks. Although the interim arrangement was extended, the judge found that it expired on 27 May and was not revived.

Performance continued after expiry while drafting progressed, detailed conditions and schedules were negotiated, RTS carried out substantial work and payments were calculated by reference to the agreed contract price. By 5 July, the principal conditions had been agreed, although some schedules and guarantee matters remained incomplete. On 25 August, the parties agreed a material change to the delivery sequence and treated it as a variation of the arrangements already governing the project. No formal contract was executed or exchanged, even though the draft made execution and exchange conditions of effectiveness.

The dispute required the Supreme Court to determine whether a contract existed after expiry of the letter-of-intent agreement and, if so, upon which terms, because the possible answers had markedly different consequences. There might have been no contract at all, a limited contract consisting only of the terms identified by the trial judge, or a wider contract incorporating the detailed conditions negotiated by the parties. The formation question could not therefore be separated from the identification of the operative terms.

4.2 The objective test

At paragraph 45, the Supreme Court stated that the existence and terms of a contract depend upon what the parties agreed, determined from what they communicated by words or conduct and assessed objectively. The inquiry is whether the outward record demonstrated an intention to assume legal obligations and agreement upon the terms that the parties regarded, or that the law required, as essential. Terms of economic importance may remain unfinished without preventing formation, provided that the parties did not intend agreement upon those terms to be a condition of commitment.

That formulation rejects two forms of oversimplification, the first being the proposition that extensive performance necessarily proves the existence of the full contract under negotiation. At paragraphs 47 and 54, the court made clear that performance is relevant but not conclusive, because the result depends upon the circumstances and the court must not impose obligations that the parties did not reach. The second is the proposition that an unsigned agreement can never bind where the parties originally contemplated execution. A requirement for signature may retain its effect, or it may be waived through unequivocal communications and conduct; the legal conclusion must be derived from the whole course of dealing.

4.3 Agreement, outstanding terms and performance

The Supreme Court examined two contrasting construction decisions when explaining the effect of performance. At paragraph 50, it reproduced reasoning that a contract may come into existence through performance rather than through an exchange of offer and acceptance, and that an executed transaction is a matter of importance when that question is decided. Paragraphs 52 to 54 addressed a different record in which requested work proceeded while the parties remained divided over competing standard terms, including materially different liability for delay, and no contract was found. The Supreme Court treated each result as a fact-sensitive application of the objective formation test rather than as an automatic rule based upon performance alone.

On the facts of RTS, a finding that there was no contract after expiry of the letter of intent was commercially and evidentially unconvincing. The parties had agreed the total price, RTS invoiced by reference to it, Müller made corresponding payments, and both sides treated the 25 August agreement as a variation of their existing arrangement. By that date, their communications and conduct established a bargain under which RTS was to carry out the works and provide the equipment on the terms negotiated by 5 July, as subsequently varied. None of the incomplete matters was treated by the parties as a condition that had to be resolved before they could be bound.

The remaining obstacle was the clause requiring execution and exchange, which the Supreme Court accepted would prevent the contract from becoming effective unless it had been varied or waived. Waiver did not, however, require an express statement in those words, since unequivocal agreement could be inferred from communications and conduct known to both parties. By 25 August, the agreed price, substantial performance, settled conditions and contractual variation led to the conclusion that the parties had elected to proceed without formal execution. The court accordingly declared that a binding agreement had arisen on or about that date and was not subject to the execution clause.

At paragraph 1, Lord Clarke warned that parties should settle the basis of their work before performance begins. The warning remains directly applicable to construction procurement because later performance may expose rather than cure uncertainty about the governing terms.

4.4 Certainty and enforceability

Further guidance concerning agreement and certainty appears in Wells v Devani [2019] UKSC 4. At paragraphs 17 and 18, the Supreme Court reaffirmed the objective test and explained that an agreement may fail where the words and conduct are too vague to reveal contractual intention or sufficiently identifiable terms. Even so, the court is reluctant to hold an agreement unenforceable for uncertainty where contractual intention is established and the parties have acted upon their bargain, since difficulty of interpretation is not itself the same as legal uncertainty.

Wells v Devani also distinguishes interpretation of the parties' agreement from implication of a term required to make an existing bargain work. A court may undertake those exercises where an agreement exists, but it may not use implication to create a bargain that the parties failed to make. In a construction dispute, the distinction will depend upon the settled scope, price or valuation machinery, risk provisions, express conditions of formation and the parties' subsequent performance.

The correct starting point is a chronology that begins with procurement rather than execution. Every tender revision, qualification, clarification, letter of intent, draft, meeting minute, instruction, payment and agreed change should be placed against the contractual consequence for which a party relies upon it. The chronology should identify whether the communication is alleged to constitute an offer, acceptance, counter-offer, reservation, waiver, variation or evidence of performance under an existing contract. Documents should not be characterised merely by their titles; the legal effect advanced must be justified by their operative language and the surrounding conduct.

The analysis should then address existence, date and terms under separate headings. For existence, the opinion should identify the communications and conduct said objectively to demonstrate contractual intention. The date analysis should explain the event by which negotiations are said to have crossed into legal commitment, particularly where the alleged contract arose after expiry of an interim arrangement. As to terms, the opinion should map each incorporated document or condition and record any material provision that remained disputed. Where a party relies upon a signature or approval condition, the opinion must address both its original effect and the evidence said to establish later waiver.

A proper opinion should also examine the competing case because evidence of performance, payment and agreed changes may support formation, while unresolved negotiations concerning liability, design, delay or termination may show that commitment remained conditional. The weight of each factor depends upon its connection with the bargain alleged. It is insufficient to list facts that favour one side; the opinion should explain why those facts have greater legal force than the contrary evidence and should identify any missing record that prevents a concluded view.

The final stage is to state the conclusion at the level justified by the evidence. Where the record supports a limited contract but leaves the wider agreement uncertain, the opinion should say so and identify the periods or work packages governed by each possible legal basis. Separate reservation is required where formation is established but incorporation of a disputed term remains unresolved, rather than obscuring that distinction through a single conclusion that "the contract applied". Careful reservation is not indecision; it identifies the precise evidential issue upon which further advice depends.

The following matrix provides a suitable structure for the initial contractual formation review:

6.1 Project record

Northbank Developments Ltd invited Stoneframe Contractors Ltd to tender for the design and construction of a warehouse. Stoneframe's final tender, dated 20 May, proposed a contract sum of £4.65 million and qualified the employer's proposed terms in two respects: the aggregate liability cap was to be limited to the contract sum, and Stoneframe's design obligation was to require reasonable skill and care rather than achievement of every performance statement contained in the employer's technical requirements.

On 3 June, Northbank issued a signed letter of intent authorising piling works up to £250,000. The letter incorporated Stoneframe's tender scope for piling, required work to begin immediately, provided for monthly payment of properly incurred costs within the authorised limit and expired on 28 June. It recorded the parties' intention to execute a full building contract but did not state that the full contract had already been concluded. Stoneframe countersigned the document and, acting pursuant to the authority it conferred, mobilised its resources and commenced the piling works.

During June, the parties exchanged three drafts of the proposed building contract. The contract sum was revised to £4.8 million following an agreed scope change. Although the payment schedule, completion date and most technical schedules were settled, Northbank continued to reject Stoneframe's proposed liability cap, while Stoneframe maintained its qualification concerning design responsibility. Each draft contained a clause stating that the building contract would take effect only when signed by both parties.

By 28 June, Stoneframe had completed most of the piling and submitted applications totalling £180,000, which Northbank paid, although no extension to the letter of intent was issued. On 29 June, Northbank's project manager instructed Stoneframe by email to continue with pile caps, stating that the commercial terms remained agreed and that the project could not stop while signature was arranged; Stoneframe continued without expressly reserving its position.

The commercial directors confirmed the revised contract sum of £4.8 million on 10 July. Four days later, they agreed a revised completion date and instructed the project teams to update the programme accordingly. Minutes of the meeting recorded the liability cap and design standard as open points for director-level resolution. Further work proceeded, and Northbank certified two payments by reference to the payment schedule in the unsigned draft, although the contract itself was never signed.

Following delay to completion, Northbank asserted an entitlement to liquidated damages under the unsigned draft. Stoneframe denied that the main contract had ever taken effect and contended, in the alternative, that any contract arising by conduct excluded the liquidated damages provision and incorporated Stoneframe's qualified design obligation.

6.2 Assignment

Prepare a reasoned opinion of between 1,500 and 2,000 words for Stoneframe's commercial director. Within that opinion, address each of the following contractual formation issues in turn:

1. the legal effect and scope of the letter of intent between 3 and 28 June;
2. the possible legal bases upon which work proceeded after 28 June;
3. whether the parties objectively intended to enter a wider contract despite the signature clause;
4. the date upon which any wider contract was formed;
5. whether the liability cap, design standard and liquidated damages provision formed part of that contract;
6. the evidence supporting and undermining Stoneframe's position;
7. the further documents or witness evidence required before a concluded opinion can be given; and
8. the consequences of finding that no wider contract governed the post-expiry work.

Apply RTS Flexible Systems and Wells v Devani to the stated facts, including the contrasting performance examples examined in RTS at paragraphs 50 to 54. The analysis should not assume that continued work proves the full contract, nor that the absence of signature necessarily prevents formation.

6.3 Contract-formation chronology

Before drafting the reasoned opinion, complete every column in the following contractual formation schedule:

The letter of intent provides the clearest contractual basis for work carried out between 3 and 28 June. It identifies an authorised scope, a payment obligation, a financial limit and an expiry date, and it was countersigned before performance. On the stated facts, the better preliminary view is that it created a limited interim contract rather than the full building contract. Any concluded view would remain subject to the complete wording, particularly provisions dealing with termination, recovery above the limit, incorporation of tender terms and the legal effect of work continuing after expiry.

The post-expiry period admits competing analyses, since Stoneframe may contend that the express signature clause remained effective, the parties continued to negotiate matters concerning liability and design, and the 29 June instruction was no more than a request to maintain progress pending execution. Northbank may rely upon the agreed total price, settled completion date, substantial performance and payments under the draft schedule as evidence that both parties treated the main commercial bargain as operative. Under RTS, performance and payment are probative but do not remove the need to determine whether the outstanding matters were regarded as conditions of formation.

The treatment of the liability cap and design standard is likely to be central. Those provisions allocate substantial project risk and remained expressly unresolved in the 14 July minutes. That fact strengthens the comparison with the no-contract example examined in RTS at paragraphs 52 to 54, where requested work proceeded while competing standard terms and liability for delay remained unresolved. Other conduct may nevertheless establish that Northbank and Stoneframe intended immediate commitment while reserving those matters for later resolution. Accordingly, the opinion must examine whether the minutes preserved negotiations without preventing formation, or recorded matters both sides regarded as prerequisites to any wider contract.

Waiver of the signature clause cannot be inferred merely because the project continued. Relevance attaches to the 29 June email because it expressly contemplated continued performance while signature was being arranged, but its wording may support either position: it may indicate a present agreement on commercial terms, or an expectation that legal effectiveness still depended upon later signature. Agreements on price and completion date, together with payment under the draft schedule, strengthen Northbank's case; the contemporaneous record of unresolved risk provisions strengthens Stoneframe's response. Any conclusion must rest upon the combined effect of those matters rather than any isolated communication.

Even if a wider contract is established, Northbank must prove that the liquidated damages provision formed part of it. A finding of contractual intention does not incorporate every term in the unsigned draft without further analysis. Drafting history, Stoneframe's qualifications, Northbank's responses, the agreed order of precedence and any project conduct referring to the liquidated damages mechanism will be material. Equivalent term-by-term inquiry applies to Stoneframe's proposed liability cap and design standard.

If the evidence does not establish a wider contract, the legal and financial consequences require separate advice. Stoneframe's post-expiry recovery may have to be advanced on a non-contractual basis for the value of work requested and accepted, while Northbank may be unable to rely upon contractual liquidated damages. That conclusion would not necessarily leave either party without a remedy, but it would alter the governing legal basis and may remove negotiated risk allocations upon which both sides assumed they could rely.

1. Why is the proposition that "the parties plainly had a deal" insufficient to determine whether a contract existed?
2. In what circumstances may an economically material term remain unresolved without preventing formation?
3. How should a tribunal distinguish performance under a limited interim contract from performance evidencing a wider agreement?
4. What evidence would justify treating the signature clause as waived, and what evidence would point against waiver?
5. Can the same course of conduct establish a contract while leaving a liquidated damages clause unincorporated?
6. How does the express record of unresolved liability terms affect the contrasting performance analyses within RTS Flexible Systems?
7. Which formation date produces the strongest analysis, and which documents support that date?
8. What further facts would materially alter the provisional conclusion?

An elite answer will define the formation issues precisely, state the objective legal test without reducing it to formula, distinguish existence from terms and date, address the competing inferences available from each communication, and reach a qualified conclusion that identifies the evidence upon which it depends. Authority should be used to resolve the problem rather than reproduce a case summary, while recognising where the stated facts do not permit a final opinion.

Allocate the available assessment marks between the following five defined areas of performance:

1. RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 14, particularly paragraphs 1 to 25, 45 to 67 and 81 to 89.
2. Wells v Devani [2019] UKSC 4, particularly paragraphs 1 to 29 and 57 to 63.

These outline answers indicate the legal reasoning expected from a properly supported response. They are not model paragraphs to be reproduced, and each depends upon the facts stated in the applied tutorial at section 6.

11.1 Why "the parties plainly had a deal" does not determine the contractual terms

A conclusion that the parties "had a deal" answers only the question of existence and leaves untouched the two matters that usually decide a construction claim: the date on which commitment arose and the terms that comprise the bargain. In the Stoneframe problem, a finding that some contract existed would not reveal whether Stoneframe accepted the employer's ground and performance risk, whether the liability cap or the qualified design duty formed part of the bargain, or whether the liquidated damages clause in the unsigned draft was incorporated. Entitlement and valuation depend upon those terms, not upon the bare fact of agreement. The objective test in RTS Flexible Systems asks what the parties agreed and on which terms, so an opinion that stops at "a deal" has not performed the analysis the dispute requires.

11.2 When an economically material term may remain unresolved

An economically important term may be left open where the parties objectively intended to be bound immediately and treated the outstanding matter as subsidiary or as something to be settled later, rather than as a precondition of commitment. RTS Flexible Systems confirms that economically important terms may remain unfinished without preventing formation, provided the parties did not make agreement on them a condition of being bound. The test is not the money at stake but the parties' objective intention: did they regard the point as essential to commitment, or did they proceed as though bound while leaving it for later resolution. Valuation machinery, measured rates or a power to instruct variations may also leave an amount undetermined at formation without defeating certainty, because they supply an objective means of fixing the term later.

11.3 Distinguishing interim performance from a wider agreement

The tribunal must connect the performance to the proposal it objectively implements. Work that falls within the scope, cap and period of a countersigned letter of intent is readily explained by that interim contract and does not, without more, prove commitment to the wider building contract. Performance evidences a wider agreement only where it is referable to the wider terms, for example where the total project price has been agreed, invoicing and payment proceed by reference to that price, and the parties implement later changes as variations of the full contract, as occurred in RTS Flexible Systems. Where the work is equally consistent with the limited interim arrangement, it is neutral on the wider contract. The contrasting example examined in RTS at paragraphs 52 to 54 confirms that requested performance during unresolved negotiations over competing terms may occur without a concluded contract.

11.4 Evidence supporting or opposing waiver of the signature clause

Waiver of a signature clause requires unequivocal communications and conduct from which both parties objectively elected to proceed without execution. Evidence pointing towards waiver includes an agreed total price, substantial performance, settled principal conditions, payment and certification by reference to the draft, and the treatment of a later change as a contractual variation, which together drove the conclusion in RTS Flexible Systems. Contrary evidence includes contemporaneous records that the parties still regarded execution as necessary, active and unresolved negotiation of material risk terms, express reservations that terms remained subject to signature or approval, and correspondence contemplating that legal effect awaited the formal contract. On the Stoneframe facts the 29 June email cuts both ways, since it presses for continued progress while signature is arranged, and its effect must be read with the wider record rather than in isolation.

11.5 Formation by conduct without incorporation of liquidated damages

A finding of contractual intention does not incorporate every term of an unsigned draft, and each disputed term requires its own analysis. Conduct establishing a contract may leave a liquidated damages clause outside it where the party relying on the clause cannot show that this provision was agreed. Drafting history, the parties' qualifications, any settled order of precedence and conduct referring to the liquidated damages mechanism are all material. Payment under an agreed schedule may support incorporation of that schedule without proving acceptance of an unrelated cap or a liquidated damages figure. The evidence must be connected directly to the particular term for which it is relied upon.

11.6 Effect of the unresolved liability terms upon the RTS analysis

Paragraphs 52 to 54 of RTS examine a no-contract result where requested work proceeded while the parties remained divided over competing standard terms and liability for delay. The 14 July minutes strengthen that comparison because they record the liability cap and design standard as open for director resolution during performance. Other evidence may nevertheless show immediate commitment while subsidiary matters remained for later resolution. It is therefore necessary to determine whether the minutes preserved negotiations within an existing bargain or recorded prerequisites to any wider contract. That comparison turns upon whether the unresolved terms were conditions of commitment or merely outstanding details.

11.7 The strongest provisional formation date

The strongest candidate is the point at which the objective requirements were first satisfied on terms the parties treated as operative. On the Stoneframe facts that is most plausibly around 10 to 14 July, when the revised contract sum of £4.8 million was confirmed, a revised completion date was agreed and the programme was instructed, and payments were then certified by reference to the draft schedule. Those documents, read with the continued performance, provide the clearest evidence of an objective election to be bound. The competing earlier date of 29 June is weaker, because the instruction to continue is equally consistent with progress pending signature, and any date remains subject to the unresolved liability and design terms, which may show that commitment to the wider contract had not yet arisen.

11.8 Further evidence required for a concluded opinion

Facts that would materially alter the provisional view include the full wording of the letter of intent on termination and on work continuing after expiry; the precise language of the 14 July minutes recording the open points; whether the liability cap and design standard were framed as conditions of any contract or as terms to be settled within an agreed bargain; the authority of the project manager who issued the 29 June instruction and of those who certified payment; the order of precedence in the draft; and any reservation Stoneframe made when continuing. Evidence that either party expressly treated execution as essential, or conversely abandoned that requirement, would be decisive on waiver.

Scope of the lesson

This lesson concerns contractual formation under English law and provides an educational method for analysing project records. It does not determine the rights of parties to a live dispute, for which the complete communications, contractual documents, governing law and factual evidence must be reviewed.