CAN PARTIES BE BOUND TO A CONTRACT BY CONDUCT

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2nd April 2024

 

Can Parties Be Bound To A Contract By Conduct?

  1. Introduction

More often than not, parties to a contract expect that where they intend to enter into a written contract, until the terms of their agreement to contract are reduced into writing and signed by them, they are not bound by whatever they might have agreed to as the terms of their contract, presumably because there was no express intention to create legal relations.

However, situations do arise where parties intended to execute a written contract and either inadvertently or through the mischievous machinations of one party failed to do so, but nevertheless continued their relationship as though they had fully agreed to the terms of their proposed contract. Then, when liability arises, the party liable would seek to deny liability by asserting that they are not bound by the terms of their proposed contract because the contract was not reduced into writing and signed by both parties.

In certain of such situations the law would presume that although the parties failed to reduce the terms of their contract into a writing and duly signed same, they had indeed concluded a binding contract by their conduct. The aim of this article is to review through some decided authorities some of the instances where the courts have held parties bound by the terms of their proposed contract by reason only of their conduct.

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