Validity Of Preliminary Contractual Arrangements

The United Sections of the Italian Supreme Court (Corte di Cassazione a Sezioni Unite) recently issued a remarkable ruling in relation to the validity of Italian law preliminary agreements contemplating the subsequent execution of further preliminary agreements (the so called "preliminare di preliminare"), by decision no. 4628/2015 (the "Decision").

In particular, the Decision addresses the enforceability under Italian law of a binding arrangement whereby the parties agree, subject to certain conditions precedent, to enter into a subsequent preliminary agreement, which in turn contemplates the execution of a final agreement.

This brief note is aimed at summarizing the main contents of the Decision, which we believe is also relevant for acquisition transactions (both share and asset deals), where typically a preliminary binding arrangement such as a letter of intent, a binding offer or a term sheet (collectively, the "Preliminary Binding Arrangement") is executed