Spain

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Pre-contractual negotiations
  • Is there an implied duty of good faith to continue to negotiate?

    Yes, there is a duty of good faith in contractual negotiations.

    What are the consequences of termination of negotiations by one party unilaterally?

    Termination of negotiations by one party unilaterally may cause precontractual liability. In case the termination implies a breach of the duty of good faith (if there is a negligent action causing damages) it may result in the non-defaulting party being entitled to claim damages.

Confidentiality agreements
  • Are there implied confidentiality obligations where there are no formal confidentiality agreements entered into by the parties?

    Although Spanish law does not provide a general duty of confidentiality there could be implied confidentiality obligations with respect to specific types of information (i.e. personal data). However, it is common practice to enter into a confidentiality agreement in order to avoid the disclosure of confidential information provided during the negotiation.

    What are the consequences of breach?

    If there is a breach of a confidentiality agreement the non-breaching party will be entitled to claim damages from the breaching party.

    Are specific terms/formalities required for a binding confidentiality agreement?

    Although there are not specific formalities required for a binding confidentiality agreement, it is common practice for parties to enter into a specific confidentiality contract in writing regulating the relevant terms and conditions of the agreement.

Exclusivity arrangements
  • Can an obligation to negotiate exclusively be implied where no formal agreements are entered into by the parties?

    Spanish law does not imply exclusivity in negotiations. Therefore, exclusivity shall be expressly agreed by the parties.

    Are any specific terms/formalities required to make exclusivity arrangements enforceable?

    Although there are not any requirements to make exclusivity arrangements enforceable, it is advisable to execute a written agreement regulating the specific terms and conditions of the agreement.

Heads of agreement
  • Are they legally binding?

    Heads of agreement may be legally binding if there is an agreement on the essential elements of the contract. However, they may be non-binding if this is the express intention of the parties (i.e. inserting a specific clause expressly stating that the heads of agreement shall not be considered binding) or if there is not an agreement on the essential elements of the contract.

    Are any specific terms/formalities required to make them legally binding?

    When there is an agreement on the essential elements of the contract and it has been executed in the same form as required for the definitive agreement.

    What are the consequences of breach of a legally binding arrangement?

    In case of breach of a binding head of agreement, the defaulting party may be liable to pay damages.

Break fees
  • Are break fees usually payable?

    In case of unjustified termination of negotiations break fees may become payable, if so specifically agreed between the parties and they are adequate in relation to the damage caused.

    What are the main legal issues to be considered eg enforceability?

    In case a penalty clause (as a break fee should be considered) is included, it may be expressly stated that the penalty will not substitute the claim for a compensation for any damage due for breach of the duty of good faith, to avoid that penalty would be considered the only remedy.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.