A Systematic Explanation of Preliminary Agreements in the Era of Civil Code of the People’s Republic of China, and a Concurrent Analysis of Articles 6 to 8 of Judicial Interpretation on the General Provisions of the Contract Code

The legal concept of the preliminary agreement (PA) has evolved significantly in both legislation and judicial practice. This evolution began with scholarly debate and progressed with the recognition of PA as an independent contract type under the Judicial Interpretation on Sales Contracts. Subsequent amendments in the Judicial Interpretation on the General Provisions of the Contract Code (JIGPCC) have further refined this system and clarified its legal nature. The issuance of JIGPCC has opened further avenues for clarifying several key issues. These include distinguishing a PA from a non-binding agreement and defining its relationship with the subsequent definitive contract. They also cover determining its legal effect and establishing liability for its breach. Specifically, a valid PA must possess a dual character: the nature of a PA and contractual validity, satisfying the three fundamental requirements for contract formation. Its most critical distinction from a definitive contract lies in their different subject matter. To uphold the value of this institution, the doctrine of specific performance should be adopted, with courts’ judicial discretion guided by the principle of good faith. The JIGPCC is silent on whether the force majeure doctrine and the doctrine of changed circumstances are applied to PA. Moreover, the underlying rationale of these agreements supports the application of the doctrine of changed circumstances.