Frequently Asked Questions
Why should the parties conclude a preliminary employment contract?
The preliminary contract is mainly concluded in order to determine the basic conditions (position, wages, holiday etc) of the employment contract that is to be concluded in the future in the event where the immediate conclusion of the employment contract is impossible.
Does the preliminary contract oblige parties to conclude an employment contract?
Upon concluding the preliminary contract, the parties oblige to enter into an employment contract when certain conditions are fulfilled. But if one of the parties refuses to enter into an employment contract, although the required conditions are fulfilled, it might not be possible to require the conclusion of the employment contract. Due to that it is advised to apply the contractual penalty.
Why should the parties apply contractual penalty?
The purpose of the contractual penalty in the preliminary contract is to ensure that the parties will enter into the employment contract if the required conditions are fulfilled. Considering that conclusion of the preliminary employment contract gives both parties reasonable expectations to enter into an employment contract and the parties count on it while making their future plans, the non-conclusion of the employment contract probably causes some kind of damages to the party. Due to the fact that it is difficult to prove the existence and amount of such damages, it is reasonable to agree on the application of contractual penalty. The contractual penalty does not eliminate the possibility to demand the compensation for damages that are not compensated by the penalty.
If the contractual penalty payable is unreasonably large, a court may reduce it to a reasonable amount upon the request of the contract party obligated to pay it, taking primarily into account the fulfilment of the obligation by the party, the legitimate interests of the other party and the financial standing of both parties. The party obligated to pay a contractual penalty may not request a reduction of the penalty after the payment of the penalty.