Are promises to enter into a contract binding on the parties?

What are letters of intent and promises to contract?

It should be distinguished from a letter of intent, which generally forms part of the pre-contractual negotiation process and does not necessarily create an obligation to execute the final contract.

Legal doctrine defines letters of intent as agreements through which parties express their willingness to conduct negotiations aimed at ultimately concluding a contract, however, due to certain circumstances, the conditions for execution are not currently met (Parraguez, 2015).

If these letters of intent are assumed with binding force regarding a specific contract and satisfy the conditions set forth in Article 1570 of the Civil Code, such an agreement becomes a true promise to contract (Parraguez, 2015).

Promises to enter into a contract under the Ecuadorian Civil Code

In accordance with Article 1570 of the Civil Code, for a promise to contract to generate legal obligations, four essential conditions must be met:

1. It must be in writing, and by public deed if the promised contract requires formal solemnities.
2. The promised contract must not be one that the law declares invalid.
3. It must specify a deadline or condition determining when the promised contract will be executed.
4. The promised contract must be clearly specified, leaving only the delivery (traditio) of the item or the required legal formalities to perfect it.

Are promises to enter into a contract binding on the parties?

Yes, promises to contract are binding once they meet the requirements established by the Ecuadorian Civil Code.

If these conditions are not met, such agreements remain within the pre-contractual stage and constitute non-binding negotiations between the parties (Parraguez, 2015).

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