Paradise Island Lighthouse and Beach Club Company Limited v The Attorney General of the Commonwealth of The Bahamas (Bahamas)

A binding contract is identified objectively from the parties’ words and conduct, asking whether they intended legal relations and had agreed all essential terms. Parties may become bound before every term is settled once the essentials are agreed. They may instead postpone binding effect until formal execution, even after agreeing all terms.

The assessment covers the whole course of communications, including communications after the alleged formation date. Subjective beliefs are irrelevant, but later words may objectively show what was arranged. Formalities governing the ultimate disposition of land can inform intention even where they do not directly govern an agreement for a lease. A contemplated sealed and executed Crown lease may therefore remain subject to contract until the authorised signature.

The appellant claimed that a letter enclosing a detailed lease evidenced a binding agreement for a 21-year lease of five acres of Crown land. The letter required the appellant to execute and return the documents, leave the date blank for insertion when the lessor signed, and await return of a document following lessor execution. The appellant executed and returned the lease, but the Minister did not sign it.

The Supreme Court of The Bahamas dismissed the claim in 2020/CLE/gen/00463, holding that any agreement remained subject to execution by the Minister. A majority of the Court of Appeal dismissed the appeal in SCCivApp No 68 of 2023; Sir Michael Barnett P dissented.

The central issue on the second appeal was whether the courts below were entitled to hold that no binding agreement for a lease existed.

1. Appeal dismissed. Lord Hamblen, delivering the judgment of the Board, held that the issue on this second appeal was whether the courts below had been entitled to find that no agreement for a lease existed. The Chief Justice had identified the correct issue and directed himself correctly in law.
2. The governing test, drawn from RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] UKSC 14; [2010] 1 WLR 753, was objective. The court considers the parties’ communications by words and conduct, whether they intended legal relations and whether all essential terms were agreed. Parties may be bound before every term is settled once the essential terms are agreed, or may postpone binding effect until after all terms are agreed.
3. There was no evidence or finding that the detailed lease terms had already been agreed before the letter was sent. The letter could not itself establish the earlier concluded agreement advanced by the appellant. An alternative analysis under which the letter constituted an offer accepted by return of the executed documents had not been advanced before the Court of Appeal or the Board, and the Board declined to determine the case on that basis.
4. Even assuming that all terms had been agreed, the courts below were entitled to conclude that the transaction remained subject to contract, meaning subject to execution by the Minister. The letter reserved dating until the lessor signed and contemplated the return of a document only after lessor execution. The absence of a signed document, any request for rent and contemporaneous payment further supported that objective conclusion.
5. Although the Statute of Frauds and section 54 of the Conveyancing and Law of Property Act did not directly govern formation of an agreement for a lease, they supplied relevant context. Land dispositions commonly require formality. Section 54 added a requirement that a grant or disposition of Crown land be made under the Minister’s seal, reinforcing the inference that the parties contemplated becoming bound upon formal execution.
6. Subjective understandings were irrelevant, but the whole course of communications had to be considered. Applying Hussey v Horne-Payne (1879) 4 App Cas 311, the court could consider communications after the alleged formation date. The appellant’s later references to an application, approval for a lease and a request for a comfort letter objectively indicated that no binding agreement had yet arisen.
7. The Chief Justice had therefore made no error of law, and the Court of Appeal majority had been correct to uphold his decision. The Board advised His Majesty that the appeal should be dismissed.

1. Privy Council: In [2026] UKPC 30 , the Board concluded that the courts below were entitled to find that no agreement for a lease existed and advised that the appeal should be dismissed.
2. Court of Appeal of the Commonwealth of The Bahamas: By a majority judgment dated 14 March 2024, SCCivApp No 68 of 2023, the court dismissed the appellant’s appeal. Sir Michael Barnett P dissented. The court granted leave to appeal to the Privy Council on 11 July 2025.
3. Supreme Court of The Bahamas: By a judgment dated 16 February 2023, 2020/CLE/gen/00463, Chief Justice Sir Ian R Winder dismissed the claim, holding that no agreement for a lease existed because the proposed transaction remained subject to execution by the Minister.