Pre-contract Legal Effect

Precontract, as a contract which stipulates that the relevant parties should negotiate for entering into a real contract in future, is widely existed in practice. Due to its function to arrange the future transactions and character of uncertainty, precontract shall be regulated by law. The current existing laws of China do not have any provisions on precontract and the legal gaps and lack of theoretical research has led to chaos in its legal effect identification as well as remedy in judicial practice. This paper, under the legal system of China, making an integrated research on the types of precontract, the distinguishment between precontract and other similar contract, the differences between precontract and real contract in concluding and taking effect, and the liability for breaching of contract so as to regulate the application of precontract and exert its functions in the society.Apart from the Forward, this paper consists of five chapters:ChapterⅠis the meaning, type and distinguishment of precontract. The first section analyze the conception of precontract, based on which the writer made the conclusion that there is no unilateral precontract but bilateral precontract, and analysis are also made according to certainty of precontract and two types of precontract are distinguished, i.e. precontract with suspending provisions and precontract need to be negotiated. The second section focus on the similarity and differentiation of precontract, conditional contract, priority agreement and option contract and give the reason why those kinds of contracts shall not be included in the scope of precontract discussed herein.CharpterⅡdiscusses the influence of the elements of common contract on the legal effect of precontract. This chapter is divided into four parts, analysis are made from aspects of subject, declaration of intention, form and content. The influence on legal effect of precontract when there are flaws in those factors is also under consideration.ChapterⅢis the effective foundations and content of precontract. The first section states the effective foundations of precontract are the principle of freedom of contract, good faith and promissory estoppels. The second section states the major contents of precontract from the aspect of obligations undertook by the parties, such as negotiation, entering into contract and precontractual obligations.Chapter IV is about the realization of precontract's legal effect. The first section analyzes the characteristic of creditor's rights on legal effect of precontract and states the contents and ways of realization of the claims. The second section analyzes the major views on how to realize the legal affection, namely the "have to conclude contract" and "have to negotiate", and states the reason of preference on the theory of "have to conclude contract" and the necessity to invite principle of clausula rebus sic stantibus as exemption from liabilities. The third section analyzes the relations between the performance of precontract and the formation of real contract.Chapter V is about the breach of contract liability of precontract. The first section analyzes the reasons for unconcluded real contract and confirmed that the liability for breach of contract shall only be undertaken by parties when one of them falls into culpa in contrahendo (German). The second section analyzes the basis of liability of precontract, explaining the reasons why violate precontract should bear liability for breach of contract rather than Culpa in Contrahendo. The third section analyzes the features and limitations of liability for breach of contract of precontract from criterion of liability, identification of liability and manners of remedy.The concluding part summarize the core contents of this paper and in the hope that Contract Law of in China may lay regulation on precontract so as to provide legal support to precontract concluding and court judgment.