Barristers are asked all the time whether an informal agreement is binding. By informal agreement, I mean a consensus of sorts arrived at between parties which is not recorded in any elaborate formal document. 

Informal agreements may be made by: 

1)   Oral agreement;

2)   The exchange of correspondence; 

3)   Heads of agreement; or

4)   A memorandum of understanding. 

Following the making of an informal agreement, parties often continue to negotiate in the expectation that they will be able to incorporate further terms – yet to be agreed – in the formal document. 

In the event that the formal document is not executed, a question arises: Is the agreement legally binding and enforcible? It’s a deceptively simple question but not always easy to answer.