A Research On Remedies For Breach Of Pre-contract

Pre-contract is an agreement to make a contract. In market transactions, if theconditions are not perfect for making a forward contract, the parties concerned can make apre-contract to guarantee that a contract is to be concluded within a certain period of time.Pre-contract is valued for its reducing contracting cost, establishing regular tradingrelationships and maintaining transaction integrity. China’s Contract Law does not provideexpress provisions for pre-contract, but pre-contract issues have widely existed in judicialpractice, such as purchase orders, subscription books, letters of intent in real estate salescontracts, and actually they are independent pre-contracts. Such issues result incontroversies caused by different refereeing criteria in judicial practice. Interpretation ofthe Supreme People’s Court on Issues Concerning the Application of Law for the Trial ofCases of Disputes over Sales Contracts Article2introduces the concept of pre-contract andprovides legal basis for dealing with such issues in judicial practice. However, thisprovision simply contains that the counterparty can request the defaulting party to assumethe liability for breach of the pre-contract or demand the rescission of the pre-contract andclaim compensation for damages. The forms of liability for breach of the pre-contract,whether can request compulsory contracting or not and range of compensation for damageshave no specific stipulations. This dissertation is composed of five parts. The first partstarts with an overview of definitions of pre-contract, then comes up with arguments,expounds the distinctions between pre-contract and forward contract and generallydescribes the liability for breach of pre-contract; The second part specifies a variety ofopinions and arguments of remedies for breach of pre-contract; The third part explores theopinions and behaviors of remedies for breach of pre-contract in foreign countries; and thefourth part demonstrates the remedy foundation and forms for breach of pre-contract, andexemptions; The fifth part, most importantly, mainly demonstrates the specific applicationof remedies for breach of pre-contract in China; Finally, this dissertation comes up with some suggestions for China’s pre-contract legislation, especially concerning remedies forbreach of pre-contract.