Preliminary contract of the preliminary contract

Preliminary contract of the preliminary contract

On March 6, 2015, the Italian Cassazione held that parties can validly enter into a “preliminary contract of a preliminary contract”, provided that the two contracts are not simple a reiteration of the same agreement.

Just to clarify: here we are talking about three agreements: a first preliminary agreement by which the parties bind themselves to enter into a successive preliminary agreement; a second preliminary agreement by which the parties bind themselves to enter into the final agreement (for example, a real estate contract as in the case under review by Cassazione), and a third agreement, i.e. the final agreement. Scholars and commentators have been divided on the validity of a “preliminary of a preliminary” (the first agreement) because such an agreement would seem to lack causal nexus (one of the necessary elements for the validity of a contract according to article 1325 of the Civil Code). The recent Cassazione’s decision clarifies any doubt of invalidity of such a contract but specifies that there must be a reason why the parties deem it necessary to form their contractual relationship in three steps. In other words, the evaluation of validity must be done case by case. Cassazione’s Decision no. 4628 published March 6, 2015. More on this (in Italian) here.

For more info Francesca Giannoni-Crystal.