In negotiations, everything may look like a deal: price, quantity, timing, the words “deal”, “booked”, “done”, and even a confirming gesture in the chat. But a small subject to contract or subject to details qualification may mean that no binding contract has yet arisen.
Subject to means “on condition that”. Commercially, the deal may appear to exist. Legally, it is hanging on a condition. Until that condition is lifted, there may be no default, no damages and no breach - because there may still be nothing to breach.
In freight, subject to is completely at home: subject to stem, subject to receivers’ approval, subject to charterers’ approval. In trade, the familiar forms include subject to L/C opening, subject to finance, subject to compliance and subject to final approval.
In commercial haste, it is easy to miss. The price is moving, the vessel has to be fixed and the broker is already writing “done”. But if subject to remains on the paper, the trade may still be only a conditional intention.
The market rises, and the seller remembers that the deal was subject to management approval. The market falls, and the buyer is relieved that the subject was never lifted. Subject to becomes an emergency exit exactly when the trade has become unattractive.
One side may think it agreed a deal. In practice, it may only have agreed a route for walking away without consequences.
A contract does not begin when hands are shaken. It begins when the last subject to disappears. Until then, you may have polite correspondence with an open door, not a deal.