| A preliminary contract stipulating that the parties have planned to reach a final contract in a later time is labeled Vorvertrag in German law. Under such a contract, the parties are committed to carrying out the transactions or signing the final contract as ordered by the court. The "appointment-negotiation" approach adopted by Chinese Supreme People's Court to the trial of disputes over this kind of preliminary contract is based on a misuse of the legal concept. The purpose of the Contract Law is to implement the commitments and protect the expectations of the parties to a contract based on mutual consent. For a preliminary contract (such agreement may also be called letter of intent or commitment letters), the binding effects of the contract may be either that the parties should enter into a final contract or that they just need to continue the process of negotiation in order to reach an ultimate agreement. The court should find out the facts and explore the true intentions of the parties. It should neither allow the parties to break their commitment to carrying out the final transaction, nor impose any compulsory obligation of reaching an ultimate agreement to which the parties have made no commitment. The remedies for breach of contract should also be treated differently in light of the commitment made by the parties. In the former case mentioned above, the remedies should be the same as for the final contract itself, while in the latter case, the abiding party may only claim for losses on the grounds of reliance, and usually should not be given remedies for opportunity loss. |
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