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Agreement on Future Agreement and Transfer Agreement in One Document

Agreement on Future Agreement and Transfer Agreement in One Document

Czech Republic
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In a recent decision, the Supreme Court ruled on the validity of a provision in an agreement on a future agreement and which provided for an "automatic" transfer of the ownership title to the object of the sale if the future agreement was not concluded within a certain period of time. Essentially, both an agreement on a future agreement, which anticipated the subsequent conclusion of the transfer agreement, and a conditional transfer agreement itself were included in one document. The Supreme Court found that such an arrangement did not invalidate the agreement.

‍In case of an agreement on a future agreement, if the obliged party fails to enter the future (transfer) agreement when called upon to do so under the agreed terms, the entitled party may seek the determination of the contents and conclusion of the transfer agreement in court. Such judicial intervention can be avoided by the arrangement described above, which may serve as a practical safeguard, for example, in the case of option contracts, which are commonly negotiated in the form of an agreement on a future agreement.

‍In practice, it will be necessary to ensure that such a dual agreement meets all the substantive and formal requirements for the specific type of transfer agreement, as these requirements are often stricter than those for a typical agreement on a future agreement.

‍The Supreme Court's decision of 16 February 2023, ref. no. 27 Cdo 1858/2022.

By Jan Koprnicky, Associate, JSK, PONTES

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