Pre-contract is a product of phased transaction,aimed at ensuring that the parties give legal binding force to the results of the phased negotiation,while retaining the final decision-making power over the content that has not been a-greed upon.Therefore,it is different from both transaction intention and formal agreement.Although the parties just entered into a pre-contract,it should be deemed that the pre-contract has been transformed into formal contract when the parties have fulfilled their obligations in accordance with the formal contract.If either party refuses to sign formal agreement or fails to sign formal agreement due to dishonesty during negotiation,they shall bear the liability for breach of pre-contract.The reme-dies for breach of the pre-contract do not include specific performance.When calculating the compensation for breach of pre-contract damages,the judge should determine the maturity of the transaction reflected in the pre-contract based on the trust interest and the performance interest of formal contract.The completeness of the content of the pre-contract and the degree of achievement of the conditions for signing formal contract are all factors that should be considered in determining the maturity of the transaction.
Pre-contractTransaction IntentionFormal ContractLiability for Breach of ContractCompensation for Damages
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