.A case involving the impact of a counterparts clause in a draft agreement has gone all the way to the Supreme Court, which ruled that a contract existed.
In RTS Flexible Systems v Müller  UKSC 14, RTS began work on the basis of a letter of intent whilst the parties continued to negotiate the final contract. The draft contract contained a counterparts clause which provided that no contract would come into existence until each party had executed and exchanged the counterpart.
No contract was ever signed and a dispute arose. The courts treated the counterparts clause as a "subject to contract" provision. The High Court ruled that there was a contract, but on limited terms. The Court of Appeal reversed this, finding that there could be no contract until the agreement was signed. However, the Supreme Court unanimously found that the counterparts clause had been waived by conduct and that there was a contract on wider terms than those found by the trial judge. As noted by the Supreme Court, this case demonstrates the perils of beginning work without first agreeing the precise basis upon which that work is to be done. Click here for our review of this case including guidance on how parties can best protect against these issues.