Precontract

PRECONTRACT

In legal transactions, contracting parties often decide to enter into a pre-contract for various reasons, such as the current lack of financial resources, for which it is necessary to obtain a loan from the bank, or mistrust of the long party due to the fear that the item will be sold to a third party who subsequently offers a higher price than it .

In this way, they strive to strengthen their legal position and gain certainty that some legal work will be realized in the near future. Although the seemingly simple institute of mandatory law is contained in only one article of the Law on Obligatory Relations, it follows from practice that this is not exactly the case. In this article, we will try to show the established features of the pre-contract.

According to the provisions of Art. 247 of the Obligatory Relations Act ("Official Gazette" No. 35/05, 41/08, 125/11 78/15, 29/18 and 126/21; hereinafter: ZOO) the contract is considered concluded when the contracting parties agree on the essential components of the contract. However, before the conclusion of a contract occurs certain actions precede, some of which presuppose a very necessary condition (condicio sine quanon) and must always exist for the conclusion of a contract to occur. Thus, the making of an offer (a proposal for the conclusion of a contract made to a specific person or an unspecified number of persons that contains all the essential ingredients of the contract) and the acceptance of that offer must always exist in order for the contract to be concluded.

Namely, the contract is concluded at the moment when the offeror receives the offeree's statement that he accepts the offer, and in the place where the offeror had his headquarters, that is, his residence at the time of making the offer (Art. 252 of the ZOO).

On the other hand, negotiations and pre-contract are actions that are not necessary for the conclusion of a contract to take place and are undertaken by the contracting parties in legal transactions depending on their will and need. Negotiations (Art. 251 of the ZOO) are a mutual exchange of information, views and opinions of the negotiators or their representatives about the future binding contract they intend to conclude1. They are not binding, unlike an offer, but negotiators may not participate in negotiations contrary to the principle of conscientiousness and honesty, otherwise they will be liable to the other party for damages.

In contrast to negotiations, once a pre-contract has been concluded, the contracting parties, in accordance with the principle of pactsunservand, are obliged to conclude the main contract for the purpose of which the pre-contract was concluded, within the time limit set by them in the pre-contract, or if the time limit is not set when the nature and circumstances of the business dictate it.

General about the pre-contract

The pre-contract (or preliminary) is regulated by the provisions of Art. 268 of the Obligatory Relations Act, which is identical in content to the provisions of Art. 45 of the Obligatory Relations Act ("Official Gazette" No. 53/91, 73/91, 3/94, 111/93, 107/95, 7/96, 91/96, 112/99, 88/01; further: ZOO/91). Therefore, the judicial practice according to the previously valid Law on Obligations can be applied even today.

By provision of Art. 268, paragraph 1 of the Obligatory Relations Act , stipulates that a preliminary contract is a contract that assumes the obligation to conclude a second, main contract at a later date. Therefore, it follows from the cited provision that the only obligation of the preliminary contract is the conclusion of the main contract, and nothing else.

In other words, this means that by concluding a preliminary contract, the contracting parties will not assume the obligations that are the subject of the main contract, because otherwise they are concluding the main contract, regardless of what the contract is called.

According to the provisions of Art. 268, paragraph 3 of the Obligatory Relations Act, the pre-contract is binding if it contains the essential ingredients of the main contract. It follows from the above that the validity of the preliminary contract will depend on the legal nature of the main contract. For example, if the parties to the contract have committed themselves to enter into a lease agreement as the main contract, the preliminary agreement will be binding if it contains essential elements of the lease agreement.

If the pre-contract does not contain the essential ingredients of the main contract, then the pre-contract does not produce legal effects, that is, it is void. Namely, since the making of the preliminary contract is the conclusion of the main contract, the essential ingredients of the main contract must be determined or at least determinable.

Therefore, if the essential components of the main contract are not determined by the pre-contract, nor are they determinable, and therefore the necessary content of the main contract, which the contracting parties to the pre-contract have committed to, is not determined, the pre-contract is void and does not produce legal effects.

In addition, the purpose of the provisions of Art. 268, paragraph 3, of the Obligatory Relations Act, according to which the pre-contract must contain the essential ingredients of the main contract, is that it is possible to demand the compulsory execution of the main contract through the court. Otherwise, it will not be possible.