Preliminary agreement

The preliminary agreement is regulated in Article 389 of the Civil Code.

• 1. A contract by which one or both parties undertake to conclude a specific agreement (preliminary agreement) should specify the material provisions of the final agreement.
• 2. If the time limit within which the final agreement is to be concluded has not been specified, it should be concluded within a suitable time limit set by the party entitled to demand the conclusion of the final agreement. If both parties are entitled to demand the conclusion of the final agreement and each of them has set a different time limit, the parties shall be bound by the time limit set by the party that made the declaration earlier. If no time limit for the conclusion of the final agreement has been set within one year of the conclusion of the preliminary agreement, the conclusion of the final agreement may not be demanded.

Purpose of the preliminary agreement

The purpose of a preliminary contract is to establish the conditions for the performance of a given legal act in the future. This construction is based on the separation of the binding effect of the legal act from the dispositive effect. First, the parties conclude a preliminary contract by which one or both undertake to perform a specific legal act in the future. Then the parties conclude a promissory contract to which they have committed themselves in the preliminary contract.
A preliminary agreement only has the effect of binding the conclusion of a subsequent contract. A preliminary agreement is not a reciprocal contract.
A promissory (definitive) contract, on the other hand, has a purely dispositive effect, that is, it has the effect of transferring an asset from the property of one party to the property of the other party.
A preliminary contract is concluded when the parties are not yet willing or able to conclude a contract with dispositive effect.
Case law accepts the possibility of concluding a preliminary agreement which obliges one to conclude a second preliminary agreement (so the Supreme Court in its judgment of 28 October 2010, II CSK 219/10, OSNC 2011, no. 6, item 73).

Deadline for the conclusion of the final agreement

The designation by the parties of a date for the conclusion of the final agreement (i.e. the performance of an obligation under the preliminary agreement) is not an element on which the validity of the preliminary agreement depends. The parties to a preliminary agreement may therefore, although not necessarily, specify in the preliminary agreement the date by which the final agreement should be concluded.
A time limit may be set by indicating a specific date for the conclusion of the contract or a time frame, but also – a specific event that should occur in the future.
It must be emphasised that the arrival of the deadline for the conclusion of the promised agreement is not so much linked to the expiry of the obligation to conclude it, but only to the enforceability of the claim for its conclusion. This means that after the expiry of the time limit that has been set for the conclusion of the promised agreement to no avail, the obligation to conclude the promised agreement still exists and can be enforced by means of state compulsion through the courts.
In the absence of any indication in the preliminary agreement as to the date by which the final agreement should be concluded, that date shall be set by the party that is entitled to demand the conclusion of the final agreement. If both parties are entitled to demand the conclusion of the final agreement and each of them has set a different deadline, the parties shall be bound by the deadline set by the party that has made a prior declaration to the other party. Therefore, it is not a date that has previously occurred, but a date that has previously been specified by a party.

Form of the preliminary agreement

A preliminary agreement may be concluded in any form. This rule shall also apply where the conclusion of the final agreement requires a specific form. However, it is advisable to conclude a preliminary agreement in the form that is required for a valid conclusion of the final agreement. This is important from the point of view of the legal remedies available in the event of non-performance of the preliminary agreement.
Legal status: 25.09.2024