You plan on starting a business and you visit commercial buildings where you could set up shop. During a visit, you come across a place that is not ideal but that could work, and the price is good. The owner tells you that a potential tenant is strongly interested and that the space may not be available for long. Afraid of losing this opportunity, you agree on the rental price and the occupancy date and you indicate that you will take the space. You shake hands and the landlord tells you that his lawyer will send you a draft lease to sign.

In the following days, you continue to shop for a space because, after all, you still haven’t signed anything. You finally find a rare gem: unbeatable price, perfect location and there is almost no work to do. So you hasten to negotiate a lease for this location and tell the owner of the previous location that you are no longer interested. However, he tells you that he no longer has a tenant and threatens to seek reparation for the months of rent lost and all the damage caused. You find it unbelievable, you are sure that since you have not signed the proposed lease, you are not responsible for anything. 

Who is right?

When you indicate that you are going to take the space starting from such date and you agree on the rental price, an agreement is reached. This agreement cannot be regarded as a lease. It is rather the equivalent of a preliminary contract: you agree to negotiate in good faith the terms of a commercial lease for the intended location. So you cannot just change your mind and refuse to sign for no reason. The situation is different if during the negotiations you realize that the landlord insists on clauses that are unfavourable to you and you cannot reach an agreement. In that case, you may legitimately refuse to sign the proposed lease. But anyone who refuses to sign a proposed contract without a valid excuse risks having to compensate the other party for the damage suffered, which can sometimes be substantial.

This reasoning can be applied to any type of contract.

Honour your commitments and keep your word, otherwise you expose yourself to the consequences of the law.