¿Qué es un contrato de condiciones previas?
Preliminary contracts, as the name indicates, are first contracts that must be operated for effective execution of the concerned contracts. For instance, in case of a real estate transaction, before the sale, there is typically a preliminary contract under which only a sum is paid as advance in return of the guarantee of future sale. Preliminary contracts are also commonly used in construction site agreements and business transactions.
In many instances, the sale or one or more other contracts either in real estate, construction site or business will not take place unless they have been preceded by a preliminary (or reservation) contract. This is a contract that anticipates and conditions a definitive contract and under which a party is committed to make immediately a part of its cost and establishes a time frame to conclude the definitive agreement. The preliminary contract is thus a guarantee that the sale or the conclusion of a contract will materialize at a given future time. Since the conclusion is certain for the parties , the preliminary contract can be the source of obligations similar to the definitive contract, such as the obligation of payment for the part already paid.
However, if we analyze the concept of preliminary contract, in law it is a consensus of the parties on an obligation present in a contract that will materialize (in the future) and in a given period of time. Thus, the content of those contracts cannot be so specific that they could bind the parties. Let us take an example: in a contract that anticipates a future continuation of the data processing service, the price can only be determined based on present costs, which prevent the meeting of the terms of future contracts.
Elementos fundamentales de un contrato de condiciones previas
Whether a preliminary contract is possibly performed and vice versa is determined by the general view that the conclusion of a preliminary contract refers to the conclusion of a final contract, which will determine the specific terms (such as date and final price), the provisions of which are easily identifiable in the preliminary contract. It should be recalled that for a contract to be binding there must be agreement on all significant aspects of the same, so that there are clearly identified obligations and stipulations to be put into effect.
With this in mind, there are some preliminary contract elements that are fundamental to achieving the final contract, which are:
Accordingly, parties entering into this type of agreement ought be aware that a preliminary contract is binding and if one of the contracting parties decides to breach their obligations with regards to the execution of the final contract, the other contracting party may sue for damages.
Naturaleza jurídica y validez
The enforceability of preliminary contracts varies widely among legal systems. In many civil law systems, a court may enforce only the obligations contained in a binding preliminary agreement and not the obligations in a subsequent document. Generally, there are either administrative, penal sanctions against the non-defaulting party or monetary sanctions. Liquidated damages may not be expressly permitted in many civil law jurisdictions and even if they are, courts do not heavily rely on them. If the agreement is not personalized, sanctions are generally low.
For example, under French law, damages would be limited to the loss of opportunity to perform the contract (Article 1121 CPP). If an administrative sanction exists, the party breaching a binding preliminary contract may be subject to a fine or a prison term of six months in jail. However, damages are limited and not punitive. Even the freezing of any funds that were meant to be used to pay for the acquisition may not be possible in France. This is because third party effects do not generally exist in the French system. Courts are generally not inclined to mandate undertakings that are impossible.
In civil law jurisdictions, a customary practice may have developed to provide an interim step. For example, in Iceland there is an agreement entitled an "interim agreement." This is the first step in the processing of a sale – a "letter of intent" – not yet a full sales contract. In fact, there may be an interim agreement in place at the time that a full sales contract is signed. The general purpose of an interim agreement is to have a binding effect for some period of time while certain conditions are fulfilled. For example, if the sale cannot be finalized until a foreign company receives its foreign investment approval or the sale price cannot be determined until a report is completed, the parties may enter into an interim agreement. An interim agreement may also have the same purpose as a letter of intent.
In Anglo-American law, a binding preliminary agreement is an enforceable contract. However, not all preliminary contracts are binding and the court must generally do some analysis to determine if a preliminary contract was intended. When parties sign a document containing terms of a contract, the parties have entered into a binding or enforceable contract. Each party has an obligation to perform its part of the bargain and the parties have a legal, enforceable right against the other party if it defaults. The forces that bind the signatories are the same as those that bind parties to conventional contracts. These include: offer; acceptance; consideration; intention to create legal relations; and capacity to contract.
Moreover, in Anglo-American law, not all preliminary contracts are enforceable. An agreement to reach an agreement is not enforceable because there is no contract. Simply, the agreement does not have the four elements necessary for a contract. Evidence of an agreement to agree may be found in the correspondence between the parties. After an offer has been made, the parties need to agree on various aspects of the contract. The offer contains all of the contract terms. A counter-offer resists the offer and the original offer is void. If the offeree changes the terms of the counter-offer and circulates a draft, the offeror is not bound by the initial offer. The parties may even intend to be bound only by a later, formal contract. Even if this is the case, the agreement will be enforceable if it contains all the elements necessary for a legally binding contract.
California law also favors preliminary agreements as a vehicle for informal parties to negotiate and close an acquisition. There are three enforceable agreements: a bilateral contract; statutory contract; or quasi-contract. Parties may even enter into an agreement that is neither a contract nor a statutory contract. For example, a letter of intent may not be a bilateral contract, but it may be a statutory contract. A quasi-contract, or implied contract, requires that the parties suffered a loss and the forced donation of property or money to or from the other party is inequitable. Liability arises from the obligation imposed by equity to provide restitution, of unjust enrichment, rather than from a term in a contract or statute. The doctrine of unjust enrichment provides a party in a contract action with a remedy where the opposing party has received a benefit from the contract that would be unjust if it were not paid for. However, unjust enrichment is a fiction that operates when the contract fails or is incomplete. This remedy is compensation for an unjust enrichment, not a punitive damage.
Under these legal systems, though the specific rules may differ, the courts generally are disinclined to consider damages punitive. Ex Ante, the parties may agree to liquidated damages. The difference between ex ante liquidated damages and punitive damages is that the former are intended to compensate and the later are intended to punish. This distinction is important because in most jurisdictions, including the United States, punitive damages are not recoverable in breach of contract actions.
Ventajas de los contratos de condiciones previas
Benefits:
They provide the parties with the understanding of what is involved in the following contract. They aid clarification as to what is expected from the vendor and purchaser. In the preliminary documents a vendor will be expected to disclose much of the information about the property so as to avoid future breaches of contract claims and likewise it is important for the purchaser to disclose items required prior to them signing the contract so as they do not harm the sale. They set up the framework and foresight for their main contract to be established. Preliminary contracts provide security for the parties involved as it shows good faith from both parties that they are committed to the sale. Therefore if a sudden change of heart later arises, the forfeited deposit can be used as a means of reparation.
Desafíos y riesgos comunes
While preliminary contracts can be useful in securing agreement on certain terms, they can also become a source of contention and bureaucracy when the terms within them are not properly defined. One common difficulty is that the memorandum will contain terms that are considered ambiguous. For example, such an agreement may state that the contract is for the sale of 8 acres of land. However, it may not specify where those eight acres are located or how they should be verified. When electronic mapping is so prevalent, it would be easy to be unaware of the particulars of the property in question and whether that is agreed upon between both parties. As a result, there may be confusion later on when the contract is enforced. Another area of concern has to do with miscommunication. If the parties in the deal are not present when the preliminary contract is drafted, they may miss out on crucial discussions and negotiations that create ambiguity within the document. A different version of the contract is given to each party (whether by mistake or on purpose), and they do not closely check their copy, thinking they have the same terms as the other party. When it comes time to enforce the contract, the parties may find that there are issues because the versions are not the same. A lack of disclosure can also be a problem for preliminary contracts. It may take months for negotiations, and before that is completed, all parties are either assuming there are no problems with the property in question or are unaware of certain problems. For example, if there was a water contamination issue that was not disclosed, the buyer may step into a major problem. There is a risk that one or both parties will not come through with the agreed-upon terms when it comes time to execute the purchase. Unless the final contract has different details than the preliminary contract in regards to time frames, conditions or price, a contract is considered binding once it has been signed by the two parties.
Redacción de un contrato de condiciones previas
In drafting a preliminary contract, the foremost consideration should be clarity. The nature of the agreement must be clearly described; the parties to the agreement should be identified with certainty; the subject matter should be described in detail; the consideration and mode of payment should be set forth; any conditions that must be satisfied prior to closing should be enumerated and defined; and the time and place for closing the transaction should be specifically identified.
Basic clauses commonly found in a standard N.Y. State real estate contract should be included in the preliminary contract and sufficiently described or set forth therein in order to avoid future disputes between the parties. Basic clauses including a clause describing the property and any fixtures to be included, a description of the purchase price and method of payment, a contingency clause giving the Purchaser the right to inspect the property and obtain a mortgage commitment in order to "bind" the seller . A clause should also be included explaining that the title to the property must be conveyed by warranty deed upon the payment of the purchase price. Another clause should be included setting forth the settlement day and time for the title to pass, as well as setting forth when possession of the property shall be transferred to the Purchaser and from whom. Additional clauses may also be included which provide for the Purchaser obtaining a title insurance policy at the time of settlement, a survey of the premises paid for by the Purchaser, a provision for prorating real estate taxes, a provision pertaining to the Seller’s obligation to notify the Purchaser of any contracts of sale, a provision for adjusting for closing expenses and an addition that provides that the contract would not bind the Seller unless "accepted in writing" by the Seller. In addition, the contract should indicate the deposit amount which has been paid by the Purchaser or is to be paid, and the date on which the balance will be due.
Ejemplos prácticos: casos de contratos de condiciones previas
The significance of preliminary contracts extends well beyond the pages of legal textbooks. In 2013, for instance, a major UK national newspaper submitted a letter of intent for a proposed publishing joint venture with the possibility of exclusivity in a key European market. The counterpart obliged and crafted the proposed contract without ever having discussed or negotiated the ancillary issues, such as the split of revenues, the working relationship, and the decision-making process. The newspaper group later backed out of the proposed arrangement with its counterpart, forward thinking lawyers having informed the parties’ CEO (it was later learned) that a legally binding agreement had already been established.
In another case, a software entrepreneur spent more than a million dollars to develop a multi-lingual project management software application to sell to various property developers around the world. One of the developer companies expressed interest in the software, and the entrepreneur and the developer entered into a confidentiality agreement, discussed the details of the project, and then signed a letter of intent, acknowledging the "intent to begin negotiations but not consummate a binding contract." They agreed that both the entrepreneur and the developer would invest equal amounts of money in the next phase of the project. Thereafter, the developer refused to share additional project expenses or progress, effectively foreclosing the entrepreneur’s ability to exercise any influence in the project. The deal was never finalized, but valuable and non-tangible expectations had been created.
And in yet another recent case, an Asian-backed Canadian development company sent a letter of intent to a US-based operating company, which expressed its intent of acquiring a 50% equity interest in the former. The Canadian company then offered the US company a "first right of refusal" for any interest in a sister project that originated at the same time as the US company’s expression of interest to acquire a 50% equity interest. The Canadian development company ultimately rejected the US company request for information and snuffed out the opportunity to move forward with the investment. The court ruled in favor of the US company on the basis that a legally binding contract to negotiate was created when the terms of the terms of "the letter of intent" were established, including the US investment company’s "double-due diligence rights" and the "first right of refusal" regarding the sister project. The court held that the developer was liable for the US company’s lost investment opportunity in the sister business and for Downtime damages as a result of the engineering delays in the project in order to assess the financial harm from the breach.
Cuándo utilizar y cuándo evitar los contratos de condiciones previas
To determine the usefulness of a preliminary contract in the negotiation process, it is first necessary to know the essential characteristics of this type of contractual agreement. In short, preliminary contracts are non-performable by either party. This means that negotiating parties have no ability to execute a preliminary contract during negotiations while there are still significant issues to be sorted out.
However, preliminary contracts can actually be beneficial and indeed, a crucial step towards executing a final deal. Why is that so? The answer is that such agreements can be a mechanism of legally binding negotiation. Negotiation does not end as soon as an agreement is reached on a particular set of terms. It can be a difficult process to reach an agreement on other aspects of the proposed deal, and negotiation can go on for an extensive period of time. A preliminary contract allows negotiating parties to maintain some degree of commitment to a deal and avoid "deal fatigue," which can sometimes occur when negotiations get drawn out over time.
There are two areas in which preliminary contracts are useful or even essential:
The above examples assume that a deal is indeed reached in the future and becomes an actual deliverable. However, by their nature, preliminary contracts always carry a risk that the deal itself will not go forward, especially if there is no earnest or good faith basis for requesting a preliminary contract.
In addition to the above two use cases, however, there are some situations in which preliminary contracts are not particularly useful. For example, if both parties are not willing to commit to enough of the essential terms of a deal, a preliminary contract probably doesn’t make sense. The same is true in commercial real estate deals where the negotiating parties, in good faith, are able to negotiate all the key elements of a deal. If all of the elements of a deal are expected to get worked out, there is little need for a preliminary contract. If, for some reason, some of the deal’s aspects must change, either for regulatory compliance or optimizing cost, it will usually not make sense to include a preliminary deal.
Conclusión: tomar decisiones contractuales informadas
As we have learned in previous cases, it is essential that one comprehends any agreement entered into. This is especially important in contracts where a significant amount of money or time has been invested or time is critical. If a disagreement arises following signing, a party may become embroiled in extra, unnecessary expenditures of funds and time in their efforts to protect their investment in the transaction.
Conversely, in signing a contract, a party may be agreeing to something which could be detrimental to them, as in the case of an indemnification clause . A basic understanding of what contract terms mean can facilitate a faster and more efficient resolution should a dispute occur: oftentimes, costly lawsuits can be avoided if the parties understand their obligations and/or options.
When in doubt, consult with a legal professional to assist in explaining the terms of a potential contract. This is true for either drafting an agreement or in seeking legal counsel in the context of a contractual dispute.