Preliminary contract in Polish law
This is a specific type of contract upon which either a one party or both formally undertake to enter into a definite contract in the future – a final contract. Preliminary contract is concluded primarily when the acceding parties for various reasons are not yet ready to conclude a final contract but they wish to guarantee its concluding in the future.
Elements of the preliminary contract
The preliminary contract for its validity and enforceability should specify the most important elements of the final contract. Therefore, the parties which accede to the contract shall specify the scope and type of mutual obligations and benefits provided by the provisions of final contract.
For instance in case of sales contracts, the main components of such contract would be the subject of sale an its price. The preliminary contract may also contain provisions on the method of payment and securing the claims in case of refusal to conclude a contract promised by one of the acceding parties.
The preliminary contract should also specify the deadline for the concluding the final contract. In case that such term was not specified, each party is allowed to indicate the deadline for conclusion the final contract. However, such entitlement expires after one year counted form the conclusion of preliminary contract.
The preliminary contract should be concluded in the same form as it is required for the validity of the final contract. If one of the parties does not wish to enter into a final contract (despite concluding preliminary contract) then the other party may effectively demand its conclusion by filling such claim in front of the court. However, if the preliminary contract has was not concluded in the form required for the final contract, then the party loses the right to pursue the claim for conclusion the final contract. In such cases as a rule the party is entitled to pursue claim for compensation the damages caused by the other party by not concluding the final contract.
The above comments on the form of the preliminary contract are extremely important in the sale of real estate, where the Polish law requires the form of a notarial deed.
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