Legal Updates

A party who began performing obligations under a contract prior to its execution is entitled to due consideration even if a binding contract was not executed

June 16, 2024

For a long period of time, parties negotiated for the provision of services, but this did not result in a binding contract. At the same time as the negotiations took place, some of the services there were to be included in the contract were provided.

The Court held that the service provider is entitled to due remuneration and this is due to the prohibition on unjust enrichment. When parties to a negotiation begin to perform their obligations under the potential contract under the expectation that a contract will be concluded but it is not, each is entitled to the restitution of the benefits it gave to the other and failure to restitute it constitutes unjust enrichment. Therefore, the party who started providing a service, with the recipient’s consent, will be entitled to receive a due remuneration for the service rendered. Here, for six months, from the beginning of the negotiations between the parties, one party, with the other’s full consent, rendered some of the services the recipient sought to be included in the contract, and this under the joint expectation that these services would be included in the final contract. Therefore, the service provider is entitled to due compensation for those services, even though no binding contract was executed.