Legal Updates

Raising material demands in negotiation is ground for termination of the negotiation even if the demands are withdrawn from

January 26, 2020

A hotelier found an opportunity to win a tender for an apartment hotel management, participated in the tender and won, and at the same time negotiated with a childhood friend to establish a hotel management partnership and even presented him as a partner to third parties. The negotiations lasted about five months, during which drafts were exchanged, all of which were titled "Draft for Negotiations Only" but when the friend raised a demand for management fees he was informed of termination of the negotiations and refusal to continue it even upon withdrawal from the demand.
The Court rejected the claim and held that there was no binding agreement and the negotiations were duly withdrawn from. Except in specific cases provided for under law, a contract does not require to be in writing but merely requires an offer and its acceptance, and that from such one may learn of agreement and specificity, i.e. that the parties intended to enter a binding relationship and agreed on all essential details of the transaction. Here, from the conduct of the negotiations for a long time and the issues that have arisen each time, one can see that there was no agreement on the essential details but only negotiation and the withdrawal from such was made in good faith. The title of the documents which states that this is a "draft for negotiation purposes only" also indicates the lack of intention to enter into an agreement at that stage.