Preliminary contract – The main meaning of this term is a contract with the role to prohibit the party to enter into similar legal relations with third parties on a later stage. But to secure that this party will sign the final contract, with the agreed terms and conditions. The Preliminary contract is used often within the Contracts & Obligations Law. There the term usually refers to an investment contract with embedded installment payments. Usually signed for purchasing a plot of land or an apartment/house. Also called somewhere “land agreement” or “land agreement”. It is a legal base for concluding at a later stage the final contract in the form of a Title Deed.
The preliminary contract basically ensures that both parties will follow the agreement to arrange the transfer of ownership. And any deposit made on signing the preliminary contract that the seller has received will be the guarantee for that. He could keep the deposit if the buyer quits. On the opposite, he has to return the double amount if he decides to quit at some point. This is how the deposit option works normally.
*Note that it is advisable to hire a lawyer who to draw your preliminary contract. Lawyers have a qualification in Laws. And they know what terms and conditions should be implemented in such forms to protect your interests. As well to consult you on the clauses of proposed preliminary agreements to you for signing.