A pre-contract is a contract in which an obligation is undertaken to conclude another, main contract at a later time. The formal requirements applicable to the main contract also apply to the pre-contract if the prescribed form is a condition for validity. A pre-contract is binding if it contains the essential elements of the main contract. The main contract may be demanded within six months from the expiration of the deadline set for its conclusion, or, if no deadline is set, from the date when the contract should have been concluded according to the nature of the transaction and circumstances. A pre-contract is not binding if the circumstances have changed so significantly since its conclusion that the contract would not have been concluded under such conditions.92
By signing a pre-contract, the parties commit to concluding the main contract in the future, meaning that the pre-contract must already include the essential elements of the main contract. This means that key elements, such as the object and price in a sales contract, must be clearly defined.
The purpose of a pre-contract is to enable parties to commit to concluding a main contract in the future. In practice, a pre-contract protects the interests of the parties, prevents misunderstandings, allows time for the preparation of the main contract, and ensures a certain level of legal security. It can also facilitate financing for the main contract.93 Even though the main contract has not yet been concluded, the pre-contract binds the parties, preventing one party from unilaterally withdrawing without consequences, as the interested party may request the conclusion of the main contract in court.94
Exercise:
On 23 February 2006, Nina and Alenka concluded a pre-contract, agreeing that Nina would sell a renovated house to Alenka for a purchase price of €69,270.00. To secure the obligation under the pre-contract, a deposit was also paid. On 23 November 2006, an inspection authority proposed a land registry annotation due to an unauthorised extension of the house.
- Is the pre-contract binding on Alenka and Nina?
- Can Alenka assert a warranty claim due to a legal defect?
