It is also possible that the parties provisionally specify a number of points for the future substance of the contract as a preliminary to its actual conclusion. Such preliminary agreements are referred to as "punctuation". Unlike regulations in other countries, punctuation constitutes no direct liability under German law but may be unilaterally withdrawn at will by either of the parties involved in the punctuation. However, an important point with the use of punctuations in contract negotiations is that the limit of a preliminary contract which commits one of the parties should not be exceeded and that all that is involved is the recording of envisaged contract points which have no legally binding effect. If this principle is not observed, punctuation may give rise to a legal liability for the parties contrary the basic lack of any commitment effect. All that has to be observed with punctuations without any legally binding effect is the basic obligation to conduct negotiations in good faith, with this in turn constituting the sole basis for any liability.

For further information please contact Dr Erich Michel, Wessing Berenberg-Gossler Zimmermann Lange, Freiherr-Vom-Stein-Strasse 24-26, Frankfurt am Maim 60323, Frankfurt, Germany- Tel: +496 997 1300, Fax: +496 997 130100.

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