Confidentiality Agreement. A confidentiality agreement is a "first date" agreement.. Often the two parties have had little business dealings with each other prior and the purpose of the discussions is to determine whether there is a mutual interest in what is being discussed. Note however that it is just as necessary to have a confidentiality agreement when the parties know each other well. Discussions under confidentiality allow the information receiving party to stay "Stop, let's not take this discussion further as I am already doing what you are disclosing to me".
The Court in its decision reiterated that in terms of letters of intent, it will not impose binding contracts where none existed and therefore each case will depend on its own facts, taking into consideration what is communicated between the parties by words or conduct. Where contracts are negotiated "subject to contract", the Court noted that, it will not always infer that a contract has been agreed on those business terms that are "subject to contract". However, in this case, the Court decided that the parties had agreed a binding contract and that the binding contract was not subject to contract for the following reasons: Given the parties agreement over price, it was unrealistic to infer that the parties did not intend to create legal relations; All the essential terms had been agreed and variations were agreed without stating that they were "subject to contract". The actions and communications of the parties indicated that they had accepted the contract terms and formed a legal contract, without the necessity to require a formal written contract; and