The Impossibility of including potestative conditions in a preliminary agreement

Courts of two instances refused to compel the conclusion of a main share purchase agreement for an LLC based on the terms of a preliminary agreement. The key reason was the inclusion of a potestative condition – a prohibition on the seller from alienating the share to third parties. 

The courts pointed out that a preliminary agreement cannot make the conclusion of the main agreement contingent upon events that allow for the parties’ loss of interest (such as selling the asset to another person). Such a prohibition contradicts the nature of a preliminary agreement. The courts also stated that the obligation to conclude the main agreement was terminated, as neither party took actions aimed at concluding it, consequently losing interest in doing so. 

 

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