Document background
The Preliminary Agreement For Sale And Purchase (Vorvertrag) is a crucial document in German commercial practice, typically used when parties have reached agreement on essential terms but require additional time or need to fulfill certain conditions before executing the final purchase agreement. This document is particularly relevant in complex transactions where detailed due diligence is necessary, or where regulatory approvals or financing arrangements must be secured. Under German law, it creates legally binding obligations while providing a structured framework for proceeding toward the final transaction. The agreement typically includes provisions for purchase price determination, due diligence procedures, conditions precedent, and timeline for completion. It's especially common in real estate transactions but is also used for other significant asset purchases where a phased approach to the transaction is beneficial.
