Factors of Enforceability of Preliminary Agreements Test with Emphasis on USA Courts Precedent

Abstract

Preliminary agreement means an agreement that result from preliminary negotiations process for obtaining the ground of final and main contract conclusion. These preliminary agreements treat as steps towards achievement to the final contract and these preliminary agreements have different names and different forms. In respect of legal analysis, we are encounter with this question: whether preliminary agreements are enforceable or not. In litigations happening around enforceability of preliminary agreements, similar judicial precedent did not exist in legal systems. In England law general approach is that preliminary agreements are not enforceable while U.S.A law trend to enforceability of them. In civil law countries preliminary agreements are enforceable. In Iran legal system if a preliminary agreement have all of essential terms expressed in article 10 of the Iran civil code and this agreement be considered an example of that article or be conditioned with irrevocable contract, will be enforceable. Otherwise such agreement considered as an independent condition that jurisprudently is not enforceable. American courts i pay attention to many factors as express statement, partial performance; open terms, typically written contracts and field of negotiations. Practicing these factors in Iran courts can be useful for clearing the ambiguities of Iran contract legal system.

Keywords

• preliminary agreement
• intent to be bound
• open terms
• factors test
• civil law and common law system