Preparatory Conventions
Pelin IşıntanThe precontractual phase is a gray area, difficult to define, and governed by freedom of contract. Even during the precontractual phase, the parties retain the freedom to organize their talks by agreement and to enforce contractual obligations. We refer to an act preceding the formation of the negotiated contract as a precontractual act. The Turkish Code of Obligations does not devote a specific section concerning negotiations; hence, the parties are greatly interested in organizing this phase and defining the rules to follow and their reciprocal behavior. The parties may form precontractual acts in various forms and any substance. We will limit ourselves to bilateral acts that we will call conventions; thus, unilateral actions such as the letter of intent sent by one of the parties to start negotiations will not be addressed in this article. Therefore, we intend to examine bilateral precontractual agreements, and their mandatory effect shall be the criterion. First, we will deal with preparatory contracts that create a mandatory effect for at least one of the parties. Subsequently, we will analyze alternative precontractual conventions devoid of such an effect.
Les Conventions Préparatoires
Pelin IşıntanLa phase précontractuelle est une zone grise, difficile à cerner et gouvernée par la liberté contractuelle. Les parties sont libres d’organiser leurs pourparlers conventionnellement et s’imposer des devoirs contractuels même en période précontractuelle. Par convention précontractuelle nous entendons un acte bilatéral qui vise la conclusion du contrat négocié. Puisque le Code des Obligations turc ne consacre pas une section spécifique aux pourparlers les parties ont grand intérêt à organiser cette phase et définir les règles à suivre et leurs comportements réciproques. Les parties peuvent former des actes précontractuels sous des formes et avec des contenus très variés. Nous allons nous limiter aux actes bilatéraux conclus entre les parties puisque nous examinons les conventions préparatoires. Par conséquent, les actes unilatéraux tels que la lettre d’intention envoyée par l’une des parties avec l’intention de débuter les pourparlers ne seraient pas traités dans cet article. Ainsi nous envisageons une étude sur les conventions précontractuelles en tenant compte de leur effet obligatoire. Dans un premier temps, nous traiterons les conventions qu’on pourrait appeler les contrats préparatoires qui créent un effet obligatoire pour au moins une des parties, et ensuite nous examinerons les conventions munies d’un tel effet.
The precontractual phase is a gray area, difficult to define, and governed by freedom of contract. The parties can organize their talks by mutual agreements and impose contractual obligations even in precontractual periods. The presence of preparatory conventions would be apparent when these documents show the mutual and concordant wills of the two parties. Preparatory conventions consist of stipulations to prepare a subsequent contract. Precontractual negotiations are not explicitly addressed in the Turkish Code of Obligations; therefore, the parties should keenly be interested in organizing this phase and defining the rules to follow and their reciprocal behavior. The precontractual documents may be established by the parties in various formats and contents. We will limit ourselves to bilateral acts, and as a result, unilateral actions such as the letter of intent sent by one of the parties to start the talks would not be addressed in this article.
There can be many classifications for precontractual documents. We choose to classify preparatory conventions concerning their mandatory effect.
The parties to a contract of negotiation agree to coordinate the proceedings of the talks. Consequently, it facilitates the conventional organization of the precontractual phase’s structure. The content of a negotiation contract pertains to the precontractual process and not the subsequent main contract. This means that these contracts contain only important provisions for the precontractual phase, such as the duties of each person involved, duration and conditions of negotiations, important dates, and distribution of costs. It could also contain more specific commitments such as nondisclosure, best effort, or exclusivity clauses.
Only the precontract is considered a precontractual agreement following the Code of Obligations. By mutual agreement or unilaterally entering into a preliminary contract, the involved parties commit to finalizing the main contract. However, the precontract is distinguished from other precontractual documents in several content and form-related respects. Indeed, the obligations generated by the precontract are legitimate contractual obligations.
The framework contract is a contract by which the parties lay down the main rules and conditions that will govern the subsequent contracts referred to as application or performance contracts. It is a common instrument utilized when the involved parties enter into a long-term relationship during which they execute multiple contracts bearing a striking resemblance in terms of content. The core of the content is in the framework contract, that is, the minimum content of the subsequent application contracts. The parties’ consensus regarding the fundamental aspects of their future performance contracts signifies not only the preparatory nature of the framework contract but also its obligatory effect, as the parties can no longer retreat from the agreed-upon points.
The preferential agreement is an agreement whereby one party grants the other priority in negotiations should it enter into a specific contract. In other words, one party gives the other the right of first refusal on negotiations. The preferential agreement does not oblige the conclusion of a contract; the obligation exists only for the negotiations for its conclusion.
The preparatory documents without a mandatory effect are the memorandum of understanding, meeting minutes, and gentlemen’s agreements.
The memorandum of understanding can also be called heads of agreement or memorandum of agreement. This means that the parties prepare a document on the points of agreement at any given time in their negotiations. Thus, they refrain from revisiting the same points, which shows the current state of their consensus. The existence of such a document would not infringe upon the parties’ freedom not to contract. In principle, this agreement does not constitute an obligation-generating act and therefore has no contractual effect.
Meanwhile, meeting minutes are reports of the meetings during the negotiations. One can easily see the discussion points of each meeting, which facilitates parallel meetings of groups with different authorities.
By a gentlemen’s agreement, the parties deliberately put themselves outside the law. In other words, the commitments are not legally enforceable; the parties solely pledge their honor for the execution, and the binding force exists only morally. They do not entail any legal obligations. The parties trust the honor of the co-contractor rather than the legal sanction. There is a risk if one of the parties fails to conduct themselves “gentlemanly”; however, it would be a calculated risk for the other party.
