By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group
When you’re negotiating the terms of a contract, settlement or payment arrangement, you might hear the term “agreement in principle”. The obvious questions are:
- What does it mean?
- If you agree “in principle” to a person’s offer, or that person agrees “in principle” to your offer, can the agreement be enforced?
These are questions that are considered in numerous cases and various situations. The Courts have historically considered such cases in the context of different categories of agreement based on the decision in Masters v. Cameron. Recently the Supreme Court of New South Wales looked at these questions again in the matter of P J Leahy & Ors v A R Hill & Anor  NSWSC 6. In this matter, Mr Leahy (and his related parties) commenced proceedings against Mr and Mrs Hill to recover an amount he claimed was due for repairs to a shed and arrears under a licence agreement.