“To sign or not to sign” - non-signed settlements can still be binding!! Supreme Court Confirms Unsigned Deeds Can Bind Parties Papanastassisv Papanastassis[2026] VSC 302

“To sign or not to sign” - non-signed settlements can still be binding!!

Supreme Court Confirms Unsigned Deeds Can Bind Parties

Papanastassis v Papanastassis [2026] VSC 302

Overview

The Supreme Court of Victoria has reaffirmed acritical principle in settlement negotiations: parties may be legally bound by objective intention and communication between the parties even where a deed has not been formally executed by all parties.

In Papanastassis v Papanastassis [2026] VSC302, the Court enforced a multi‑million-dollar settlement despite thedefendants refusing to sign the deed, emphasising that objective intention, notformal execution, determines whether a binding agreement exists.

This decision has significant implications for litigants, insurers, and practitioners involved in negotiated settlements and demonstrates not all settlement agreements need to be executed to be legally binding.

Background

The dispute arose in the context of family and proprietary estoppel proceedings, where the plaintiffs alleged they were promised ownership interests in family businesses and property in exchange for years of unpaid work.

·      A mediation was held inFebruary 2025 but did not result in a concluded agreement.

·      A pre-mediation agreement provided that any settlement would only be binding if signed by all necessary parties.

·      Importantly, two key beneficiaries (Ellie and Alex) were not parties to that agreement.

Following the mediation:

·      The defendants’ solicitor circulated a draft settlement deed proposing $8.5 million.

·      Negotiations continued, withonly minor amendments being discussed.

·      The defendants’ solicitorlater confirmed arrangements for execution.

·      The plaintiffs executed there vised deed and returned it for counter signature.

·      After a delay of approximately2 months and promises of execution the defendants ultimately refused to sign.

The Decision

The Court applied an objective test to ascertain the parties intention and held that a binding agreement had been formed, and the deed was enforceable despite the absence of execution by the defendants.

In reaching this conclusion, the Court relied upon the well-established principles of contract formation from Masters v Cameron (1954) 91 CLR 353, focusing on objective intention.

Key Findings

The Court identified several decisive factors:

1. Objective Intention to Be Bound

The Court assessed the parties’:

·      Correspondence

·      Conduct

·      Commercial context

and concluded that they had moved beyond an“agreement in principle” to a concluded agreement.

2. Completeness and Certainty of Terms

The settlement terms were:

·      Substantially agreed

·      Subject only to minoramendments

This supported the finding that the parties hadreached final agreement, not ongoing negotiation.

3. Solicitor’s Ostensible Authority

The defendants’ solicitor:

·      Circulated the deed

·      Negotiated its terms

·      Confirmed executionarrangements

This conduct conveyed that the solicitor had authority to bind the defendants, and the plaintiffs were entitled to rely on those representations.

4. Reliance by the Plaintiffs

The plaintiffs:

·      Executed the deed

·      Acted on the understandingthat agreement had been reached

Their reliance reinforced the conclusion that abinding arrangement existed.

5. Pre-Mediation Agreement NotDeterminative

Although the pre-mediation agreement required anexecuted settlement agreement to be binding:

·      It did not bind all relevant parties, including the plaintiffs’ beneficiaries

·      It did not displace the later objective evidence of agreement

6. Execution Was Not a Condition Precedent

The Court found that formal signing was:

·      A procedural step, not

·      A condition necessary to create legal binding effect

Key Takeaways

This decision highlights the real risk of unintended binding agreements in settlement negotiations:

·      Seek legal advice from the outset of negotiating any form of settlement to ensure the content and process of exchanging documents doesn’t inadvertently become binding when you thought this wasn’t possible without signatures

·      Exchanged drafts and unsigned agreements can still bind parties where intention is evident

·      “In principle” agreements may be treated as final, depending on subsequent conduct

·      Solicitors’ communications can have binding consequences, particularly where they imply authority or finality

·      Pre-mediation or “subject to contract” provisions are not fool proof, especially where not all parties are bound by them

Practical Implications

To mitigate risk, parties and practitioners should:

·      Clearly state when negotiations are “subject to execution”

o   Useconsistent, express reservation language in all communications

·      Align conduct with stated intent

o   Avoidactions or statements suggesting agreement if negotiations remain incomplete

·      Exercise caution in communications

o   Statements regarding execution, agreement, or finality may be relied upon by counterparties

·      Ensure all relevant parties are included

o   Particularly in multi-party or family disputes, ensure beneficiaries are party to any agreements governing enforceability

Conclusion

Papanastassis underscores a fundamental principle:

Courts will look beyond formalities and focus on substance, if the parties’ conduct objectively demonstrates agreement, a binding contract may exist without signatures.

In an environment where settlements are oftennegotiated rapidly and informally, this decision serves as a timely reminderthat intent, once objectively conveyed, may be legally decisive.

Contact our Principal Graham Fountain for advice or support when commencing negotiations for commercial agreements or at the outset of settling disputes.

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