The Study On Legal Effect About Pre-contract Agreement Upon Real Estate

Pre-contract agreement on real estate is an agreement binding on parties to signthe sales contract of real estate in the future. It has the function of arranging futuresales contract of real estate, thus it brings uncertainty. In order to conclude the salescontract efficiently and effectively, it is needed to regulate this pre-contractagreement with legislation and rules. In most of the civil law countries, thepre-contract agreement is based on the consent of the parties, to maximize thepossibility to conclude a contract. It is subject to the current rules and regulations.However, due to the deficiency of law, the law cannot interfere with this issuecompletely. The pre-contract agreement system in China inherits the concept above,but a clear and concrete system has not yet been set up. The research on this area hasnot made break through, and in judicial practice, the validity and compensation isconfusing due to lacking of legislation and academic research.This thesis will start with the cases on pre-contract agreement of real estate,combining the current judicial interpretation,“Judicial Interpretation of TheSupreme People’s Court on the Sale Contract III”, and provisions on sales of realestate, compared to the pre-contract system in other countries. The aim of the thesisis to define the nature of the pre-contract agreement and its validity, thus to regulatethe responsibility for breach of the contract and find better compensation, eventually to regulate the parties’ rights and obligations.This thesis will be dived into six chapters.The first chapter raises the issue by case study. Cases on real estate will befocused in this part and I will conclude the fundamental issue and my basic points.The second chapter will be dived into three sections. The first section willintroduce the different legal systems regarding to pre-contract agreement in differentcountries. The second section will discuss the necessity and importance ofpre-contract agreement through the judicial practice.The third section will analyze the legal nature of pre-contract agreement, basedon the specificity of sales of real estate.The fourth chapter will be divided into four sections. The first two sections willtalk about the essential conditions for the establishment and validity of thepre-contract agreement. The third section will introduce different views on the legaleffect of pre-contract by different schools, and I will give my own opinion in thefourth section.The fifth chapter will be divided into three sections. This chapter will mainlydiscuss the situation where one party breaches the pre-contract agreement during thetransaction of real estate. I will demonstrate what means the parties can use for hisremedies and the limits of the remedies.The sixth chapter will be divided into two sections. I will come up withreasonable solutions to the questions I raised in the first chapter, based on myanalysis above. The second section discusses how to avoid the disputes regarding topre-contract agreement on real estate. These suggestions are made to expect thatChina will perfect the legislation on pre-contract agreement, to guide the judicialpractice and solve disputes, thus, eventually to safeguard fairness and justice.