Preliminary Contract for the United Kingdom

Preliminary Contract Template for England and Wales

A Preliminary Contract under English and Welsh law serves as a foundational agreement that outlines the initial understanding between parties before entering into a more detailed, final agreement. It establishes key terms, conditions, and expectations while parties conduct due diligence or further negotiations. While not all provisions may be legally binding, it creates a framework for future dealings and can include binding obligations such as confidentiality and exclusivity.

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What is a Preliminary Contract?

A Preliminary Contract is commonly used in complex commercial transactions where parties need to establish a framework for negotiations while maintaining certain binding obligations. This document, governed by English and Welsh law, typically precedes more comprehensive agreements and serves to protect parties during the negotiation phase. It can include both binding and non-binding provisions, covering aspects such as confidentiality, exclusivity, and basic commercial terms. The document is particularly valuable when parties need to commence initial work or discussions while detailed terms are being finalized.

What sections should be included in a Preliminary Contract?

1. Parties: Identification and details of all contracting parties

2. Background: Context and purpose of the preliminary contract

3. Definitions: Key terms used throughout the document

4. Subject Matter: Core purpose and scope of the preliminary agreement

5. Duration: Timeframe of the preliminary contract

6. Binding Effect: Which provisions are legally binding and which are not

What sections are optional to include in a Preliminary Contract?

1. Confidentiality: Protection of sensitive information - include when confidential information will be shared

2. Exclusivity: Restrictions on dealing with other parties - include when parties want exclusive negotiating rights

3. Cost Allocation: How preliminary expenses will be shared - include when significant costs are expected during preliminary phase

What schedules should be included in a Preliminary Contract?

1. Timeline: Detailed schedule of key dates and milestones

2. Initial Terms: Outline of proposed terms for the main agreement

3. Required Information: List of information/documents to be provided by each party

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Industries

Law of Property (Miscellaneous Provisions) Act 1989: Key legislation governing contract formalities in England and Wales, particularly Section 2 which sets out formal requirements for certain types of contracts

Consumer Rights Act 2015: Legislation protecting consumer rights, including requirements for contract fairness and transparency when one party is a consumer

Unfair Contract Terms Act 1977: Regulates exclusion clauses and establishes reasonableness tests for contract terms

Misrepresentation Act 1967: Governs false statements made during contract formation and provides remedies for misrepresentation

Contract Formation Principles: Common law requirements including offer, acceptance, consideration, intention to create legal relations, and capacity

Relevant Case Law: Key precedents regarding preliminary contracts including RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH and Mammoth Plc v Stamps

Data Protection Act 2018: Legislation governing the handling of personal data, including UK GDPR requirements

Electronic Communications Act 2000: Legislation governing electronic execution of contracts and electronic communications

Limitation Act 1980: Sets statutory time limits for bringing contractual claims

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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