A Study on Provisional Contracts in Real Estate Transactions
Authors:   Korean Association of Aggregate Building Law, Lee Hong-Min 
Published: November 2023

In transaction practice, cases where a provisional contract is concluded first in the process of concluding a real estate sale or lease contract are not rare. However, not only is there no law governing provisional contracts, but also neither theories nor precedents have yet provided a consistent explanation of the concept and content of provisional contracts. Therefore, legal issues surrounding provisional contracts are still causing confusions. Diverse problems are occurring in relation to provisional contracts such as the question of when the main contract has been concluded in cases where the main contract has been concluded after the provisional contract had been concluded, whether the legal binding force of provisional contracts can be acknowledged, and whether the provisional contract deposit paid should be refunded when the provisional contract has been canceled by one party unilaterally, for example. In order to solve such problems, various opinions have been asserted such as the argument that the types in which the expression provisional contract is used should be distinguished and the legal principles appropriate for each type should be considered, the argument proposing that a standard provisional contract for concluding a provisional contract should be prepared, presented, and used, and the argument that civil law regulations should be newly established to govern provisional contracts. However, it is difficult to view that such studies have resolved all the complex issues surrounding provisional contracts.
In practice, there are various types of contracts concluded under the name of provisional contracts. Even cases acknowledged by precedents include ① cases where the provisional contract is a contract that has no difference in substance from the main contract or is a conditional contract; ② cases where the provisional contract has the nature of a reservation that imposes an obligation to conclude the main contract on one or both parties in the future; and ③ cases where the provisional contract was prepared as a basis for future negotiations and has the nature of a matter of consultation that are expected to be revised through future negotiations. These are viewed to be the difficult part of studies on provisional contracts. That is, all the various types of contracts concluded under the name of provisional contracts are recognized as a type of provisional contracts and it is sought to resolve all cases together. However, for legal relationships where the contents of the regulations can already be understood through existing explanations, such as reservations or conditional contracts, for example, it cannot be said that separate regulations are necessary just because the name provisional contract is used. That is, in order to provide effective standards for resolution of disputes related to provisional contracts, it is necessary to limit the concept of provisional contracts to a certain form. In this article, the meaning of provisional contracts in real estate transactions was understood from the perspective as such and then the legal relationship of provisional contracts was analyzed from the perspective that provisional contracts are temporary contracts concluded before the main contracts are concluded.