A preliminary agreement is an agreement the parties to which are to conclude a main agreement in future within the defined period of time on terms and conditions stipulated by such preliminary agreement (e.g., preliminary agreement of a house/apartment sale and purchase).
A preliminary agreement is intended to define the intentions of the parties to conclude a main agreement in future. As mentioned above, a preliminary agreement includes the basic terms and conditions of an agreement to be concluded in future. The basic terms and conditions include, but not limited to the following: subject, price and duration of an agreement; material provisions also include all terms and conditions that are defined as such by the parties (e.g., for an apartment sale and purchase agreement, it may be a period when a seller is to vacate an apartment).
It should be mentioned that a preliminary agreement is concluded for a defined and explicitly stated by the parties period of time, upon expiration of which the parties are obliged to conclude a main agreement. A preliminary agreement becomes null and void when a main agreement is concluded by the parties.
Preliminary agreements on real estate sale and purchase become rather common lately. Conclusion of a preliminary agreement is called to protect rights of both a seller and a buyer; it defines the commitments of the parties and ensures the fulfilment of obligations under such agreement.
Please note that a preliminary agreement is concluded strictly in the form a main agreement is to be concluded in future. Therefore, if you are going to conclude an apartment sale and purchase agreement, a preliminary agreement must be drawn up in written and notarised.