An agreement in principle has the effect of outlining the parameters of the final agreement. The function of an agreement is to define the main elements of a contract between the parties. And I think that in the course of the discussion we had, we reached a provisional agreement in principle on the conditions for a cessation of hostilities that could begin in the coming days. These are issues that are taken into account in many different cases and situations. In the past, courts have considered these cases in the context of different categories of agreements on the basis of Masters v. Cameron. The Supreme Court of New South Wales recently re-examined these issues in P J Leahy & Ors v A R Hill & Anor  NSWSC 6. In this case, Mr. Leahy (and his related parties) commenced proceedings against Les dames and Ms Hill to recover a sum he claimed for hangar repairs and arrears under a licence agreement.
In Winsor Homes, Gushe J. assessed the contractual meaning of an authorization in principle for a development project: it is important to note that the term “agreement is in principle” and not “agreement in principle”. These two homonyms are often confused, even by informed English speakers. In this case, it may be useful to remember that it is the principles of an agreement that are contained in the document. What does that mean? If you reach an “agreement in principle”, you may have agreed to terms and conditions, but probably not a final and binding agreement (unless expressly stated otherwise). The end result is that an “agreement in principle” may not be applicable. The best way is to get legal advice and carefully document each agreement, explicitly specifying whether the agreement should be binding and, if so, when and under what conditions. Often, however, the parties to an agreement begin in principle, details that will be elaborated later, to implement the agreement and elaborate the details over time.
In these frequent circumstances, the courts will be more inclined to find that there is a contract and to apply it to the best of their ability. . . .