From Proposal to Performance

Business executives and senior managers will often thrash out the main terms of a contract they are negotiating between them, before the lawyers get involved to formalise the agreement afterwards. The Judgment in DAZN Ltd v Coupang Corp. [2025] EWCA Civ 1083 is a reminder that no matter how “informal” those negotiations seem to be, and notwithstanding that the parties may mean to have a “formal” written contract drawn up later, those early exchanges of emails, texts and WhatsApps may form the basis of a legally binding contract. 

Background

The claim concerned rights to broadcast the FIFA Club World Cup 2025 to viewers in South Korea. FIFA licensed global broadcasting rights to DAZN, which was authorized to sublicense them. Coupang, a South Korean e-commerce and streaming company, sought rights to broadcast the tournament via its platform Coupang Play. 

DAZN was initially receptive to this and the parties discussed terms by email, WhatsApp and telephone calls. It was clear from the negotiations that the parties ultimately intended to enter into a formal written contract to document the terms of the deal, but none was ever concluded. 

After seeming to agree a deal via email and messaging, DAZN backtracked, claiming no binding contract had been formed. DAZN then attempted to sublicense the rights to other platforms, including YouTube, which Coupang viewed as a breach of their agreement.

The key legal issue in the dispute was whether a contract had been formed despite the fact that the anticipated formal written contract document was never completed. At first instance the Commercial Court held that a contract had been formed. DAZN appealed. 

The Judgment 

The Court of Appeal dismissed DAZN’s appeal, deciding that a contract had been formed. The Court of Appeal cited four main indicators, having had regard to the negotiations as a whole:

• Clear offer and acceptance: Offer and acceptance were clear on the face of the emails, especially against the background of various text messages and WhatsApp exchanges.
  
  
• Intention to create legal relations:
  • No “subject to contract” language was used.
  • Communications showed that both parties considered that they were legally bound after the email exchanges constituting the offer and acceptance.
• Industry practice:
  • Informal negotiations followed by email confirmation are common in sports broadcasting. There was no industry presumption that agreement was subject to contract until a formal written contract was concluded.
• Urgency and conduct:
  • The tournament was imminent, adding urgency.
  • Both parties acted as if a deal was finalized, including by planning to promote the fact that the tournament would be available on Coupang Play.

In the circumstances the Court of Appeal found that the elements necessary to form a contract were all present in the communications and a contract had been formed. DAZN’s primary argument, that the parties had not yet intended to be legally bound (because they had intended to be bound by a formal written contract), failed.

Practice points

The fact that parties intend to enter into a formal written contract but have not yet done so is often cited as an indication that discussions to that point are still “pre-contract”, “subject to contract” or otherwise not yet intended to create legal relations (and therefore not binding on the parties). However, it is just one of several factors that the Court will consider when assessing whether a contract has been formed.

Using (or omitting) a “subject to contract” label is not necessarily conclusive as to the intention to create legal relations, but it is one of several factors (and potentially a significant factor) to be taken into account when deciding whether the parties intend to be bound by their communications. If parties do not want to be bound by their exchanges, they should mark their communications “subject to contract”.

Starting to perform according to the terms proposed will be a strong indication that a contract has in fact been formed, especially in circumstances where getting the deal done is urgent. 

Beware of being lulled by the apparent informality of the early stages of some commercial negotiations as (without more) it will not prevent the Court from finding that a contract has been formed.

In short – if parties do not intend to be legally bound until a formal written contract is concluded, they should make that explicitly clear to other parties on the face of their correspondence.