Agreement in Principle Legal Definition:

An agreement as to the terms of some future contract.

Related Terms: Contract

Also approval in principle.

An oxymoron as an agreement in principle is no agreement at all.

To bind the parties, a contract must be concluded in all its fundamental terms, with nothing left to negotiate. Halsbury's Laws of England, Volume 9(1), "Contracts":

"It follows that, prima facie, there is no concluded contract where further agreement is expressly required...

"(I)f the parties have recahed an agreement in principle only, it may be that the proper inference is that they have not yet finished agreeing, for instance: where they make their agreement subject to details or subject to contract; or where so many important matters are left uncertain that their agreement is incomplete."

In Winsor Homes, Justice Gushe assessed the contractual significance of an approval in principle given to a development scheme:

"... it is merely an expression of intent and has no legal significance whatsoever."

However, often parties to an agreement in principle, details to be worked out later, commence implementing the agreement, working out the details as they go along. In those circumstances, which occur often, the courts will be more likely to determine that a contract exists and enforce it as best they can.

REFERENCES:

  • Winsor Homes Ltd. v St. John's Mun. Council 20 Nfld. & PEIR 361; also at 53 APR 361 (1978)

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