Sun Microsystems case raises issue of binding agreements

The question of whether or not an agreement exists between two parties is one of fact. Once the parties have agreed all the applicable terms, usually by a process of offer and acceptance, a contract will be formed. It is also possible for a binding contract to come into existence despite the parties' agreement that the contract terms will subsequently be recorded in a formal written agreement.

Whether the parties intend to be bound in such circumstances, or whether they only intend to be bound once the formal agreement is executed, depends on an objective appraisal of their conduct.