If there is a binding contract between the parties and, if so, what conditions depend on what they have agreed. It does not depend on their subjective state of mind, but on the examination of what has been communicated between them by words or behaviours, and whether this objectively leads to the conclusion that they intended to establish legal relations and had agreed on all the conditions they considered essential to establishing legally binding relationships. Although certain conditions of economic or other importance have not yet been definitively established for the parties, an objective assessment of their words and behaviour may lead to the conclusion that they do not intend to conclude that an agreement on these conditions is a precondition for a legally binding agreement. With regard to the regulation of international trade agreements, the 2016 principles of UNIDROIT for International Trade Agreements (ICPS) are essentially included, as several sections of the ICP could be relevant in the case of interim agreements. z.B.: Art. 2.1.1 (art. 2.1.2-2.1.12. Offer and reception), art. 2.1.13 (depending on agreement on specific issues or in a specific form), art. 2.1.14 (contract with terms deliberately left open), art. 2.1.16 (confidentiality obligation).

This presentation focuses on Article 2.1.15 (Negotiations in Bad Faith), as it explicitly refers to the possibility for international parties to enter into a pre-agreement and expressly commit to negotiating in good faith the conclusion of the final contract. Unlike a number of other European countries, England does not seem to recognise a commitment such as the one recognized in New York with regard to a Type II pre-agreement. In England (like many U.S. states), a Preliminary Type II contract would simply be an unenforceable agreement. On the other hand, England, like most U.S. states, seems to recognize as obligatory what many cases that apply New York law call a major Type I agreement – that is, a preliminary agreement that demonstrates the intention to be bound by the agreed terms that are in itself sufficient to enforce the agreement, although there are other conditions to be agreed upon. Like Lord Clarke in RTS Flexible Systems Limited v. Molkerier Alois Muller Gmbh – Company KG, [2010] UKSC 14, at point 45 (emphasizes): on the facts of this particular case, the Court of Appeal found that the Court of Appeals, instead of the “contracting subject” language, considered that the implementation of a final agreement was a precondition for “the formation of a binding agreement” because of the acceptance of the offer, but merely found that the implementation of a subsequent agreement was one of the “post-conventional requirements necessary to carry out the transfer[] of the loan, requirements that the parties had to meet under an existing agreement.” According to the Court of Appeal, “the fact that the parties anticipate and identify the future events necessary for the conclusion of the sale is not the legal equivalent of the intention to delay the formation of a binding contract without the turn of events. And after the facts of that case, the Tribunal found that the terms of that subsequent agreement had indeed been agreed.

For civil law countries (e.g. Germany, France and Chile), a clause indicating that the parties will negotiate in good faith would not in principle be a problem, since this is a repetition of the obligation to which the parties are already legally subject (points 242, 241 (2), 280 (1), 311 (2) BGB / Art. 1104 and 1112 Cciv / Art. 1546 CCivCh). However, there are some questions. First, what would be the function of such a clause? Would that affect the question of whether the available remedies are available? Indeed, the breach of such an obligation, contained in an interim agreement, could pose problems with regard to the corrective measures available, since there are differences between the contractual and non-contractual provisions.

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