In a constantly evolving world where international trade is ever-growing, precontractual liability, particularly for breaking off negotiations, is a topic of unceasing development by legal scholars and the judiciary and of increasing importance for practitioners, judges and academics, with significant consequences for negotiating contracts both at a national and at a transnational level. However, it is a topic that also appears to embody the division between the civil law and the common law tradition, as it is seen as being inextricably linked with the notion of good faith. Therefore, the assumption is that because the civil law world embraces a principle of good faith, it generally accepts precontractual liability, and because in the common law world good faith operates within much narrower confines, precontractual liability must necessarily be limited or even inadmissible. If we also consider Brexit and that, at the moment, efforts to harmonise contract law within the EU have been very much watered-down, it does seem that the divide between the common law and the civil law visions of precontractual liability is insurmountable.
It has been argued that the concept of good faith should not keep common law and civil law lawyers divided. Courts and legal scholars have made considerable efforts to demonstrate that the same results can be reached through functional equivalents. English law’s ‘piecemeal solutions’ that allow for the recovery of losses incurred or benefits unjustly received during the precontractual phase are normally referred to as leading to the same or similar results as civil law jurisdictions, albeit through different techniques and using a different language, in cases of precontractual liability. However, it can be questioned whether English law can truly achieve the same or similar results. Therefore, it is necessary to go a step further. Instead of trying to accommodate precontractual good faith within common law doctrines, the better view is that in cases of broken negotiations, precontractual liability is based on a notion other than good faith (even objectively understood) and that the development of this liability in English law (if it were desired) would not require a change in its approach towards good faith, but a change of focus to another notion which is well known to it: reliance.
Reliance in the Breaking Off of Contractual Negotiations: Trust and Expectation in a Comparative Perspective (Intersentia, 2019) explores the theoretical basis of precontractual liability for the unilateral breaking-off of negotiations from a comparative perspective. It argues that, in the selected civil law jurisdictions (Germany, France and Chile), the true basis of this liability is the notion of ‘reliance’ and it distinguishes two dimensions of reliance: ‘trust-based’ and ‘expectation-based’. For the selected civil law jurisdictions, it observes that trust-based reliance merges with the general principle of good faith and that the expectation-dimension emanates from the trust-dimension. Therefore, the book argues that this innovative theoretical approach to the foundations of precontractual liability could have important practical consequences in jurisdictions that do not embrace a general principle of good faith, such as English law.
Germany and France have been selected because they are, respectively, the leading European jurisdictions of the Germanic and Franco-Roman legal families of the civil law system, and because both have contributed crucially to the development of the doctrine of precontractual liability. Chile has been selected because it is a leading jurisdiction in Latin America which has had a particularly interesting reception process of this doctrine, taking elements both from the German and the French developments. Additionally, by selecting Chile, precontractual liability is taken out of its typically European dimension and placed in a more global context, in order to demonstrate the relevance of the topic. English law is analysed as a ‘contrasting jurisdiction’ in that, as opposed to the selected jurisdictions, it does not provide a remedy in what the book identifies as the paradigm case (a model case which frequently occurs in practice). Other case scenarios which can be placed under the label of ‘precontractual liability’, for instance, ‘sham negotiations’, are excluded from the direct scope of this work although they are sometimes mentioned (particularly in the specific scenarios where English law currently provides relief). A further limitation on the scope of the book is that it deals with negotiations for the conclusion of private law contracts, not covering issues of public law or regulatory law (such as contracts with public authorities, public tenders and competition law scenarios). Also, because the paradigm case is conceived as purely precontractual, the book does not deal with preliminary agreements, precontracts or preparatory contracts. Additionally, it does not deal with consumer law because the paradigm case is based on negotiations between parties with equal bargaining power.
Using a combined methodological approach from Zweigert and Kötz’s ‘functional equivalence’ and from the ‘common core method’ of the Trento Common Core Project, the book explores whether there is a functional equivalence between the selected jurisdictions, and between the selected jurisdictions and the contrasting jurisdiction, in their treatment of cases of liability for breaking off negotiations, and whether reliance has the potential of being the common core of this liability.
The book is structured in seven chapters. Chapter 1 provides an introduction and explores some policy considerations and legal reasons that might explain English law’s unwillingness to provide protection for cases that fall outside the scope of its piecemeal solutions.
Chapter 2 addresses the fundamental principles that underlie the doctrine of precontractual liability (reliance and freedom) and highlights the presence of the notion of reliance since the conception of the doctrine in Germany and France. It also offers a historical account of the influence of French and German law in the reception of precontractual liability for breaking off negotiations in Chilean law.
Each of the selected civil law jurisdictions is analysed separately in one chapter (German law in Chapter 3, French law in Chapter 4 and Chilean law in Chapter 5). In each of these chapters a similar structure is followed, establishing the predominance of the reliance basis (embodied in the notions of Vertrauen, confiance/croyance légitime and confianza, respectively), over other bases of precontractual liability for breaking off negotiations (traditionally good faith, abuse of rights and venire contra factum proprium). They also contain detailed analysis of the requirements for this liability to arise and of the particular situation that occurs in negotiations for the conclusion of formal contracts. In each of these chapters comparative observations are made where relevant.
Chapter 6 brings together the findings of the selected civil law jurisdictions, undertaking a detailed comparative analysis of the reliance approach as to the basis, requirements and remedies of this liability. This chapter makes a comparative analysis of the general characteristics of this liability in the selected civil law jurisdictions, paying particular attention to the much-debated issue of its nature and to the fact that it is a fault-based liability. Then comes the comparative analysis of the two more prominent bases of liability for breaking off negotiations in these jurisdictions: reliance and good faith. It examines, from a comparative perspective, the reliance basis, looking at its meaning, manifestations, genesis and justification. It then addresses the role of good faith in the breaking-off of negotiations, determining whether it is an essential factor in the configuration of this liability or whether it could potentially be replaced or displaced by the reliance element. This chapter concludes with a comparative analysis of the remedies that the reliance-based approach gives rise to in the selected jurisdictions and also in certain harmonising instruments, with emphasis on the 2016 UNIDROIT Principles of International Commercial Contracts and the various instruments that have been put forward to harmonise contract law in Europe.
Finally, Chapter 7 analyses the current position of English law regarding the treatment and solutions it provides for situations that in the selected civil law jurisdictions would be considered as falling under the label of ‘precontractual liability’. The focus is on whether these solutions protect the paradigm case. This chapter then looks at the notion of good faith in the common law world, particularly at English law’s rejection of good faith during negotiations. It argues that from this rejection it does not necessarily follow that the notion of precontractual liability should be also rejected. This chapter then demonstrates that the notion of reliance is already present in the piecemeal solutions currently available in English law, arguing that if the emphasis were shifted from good faith to the notion of reliance, English law could develop a less fragmented approach and encompass cases currently devoid of protection. This chapter concludes with a study on how legal changes could be implemented without establishing a general principle of precontractual liability.
It is important to clarify that the aim of the book is not to argue that the paradigm case should be protected by English law, but only to show that it could be protected through the notion of reliance. Moreover, the argument is neither in favour nor against harmonisation, but it shows a tool (in the notion of reliance) that would be useful to achieve some degree of harmonisation in this area of the law. In sum, the objective is to contribute to the comparative analysis of this area of liability, removing the hurdles that obstruct the view of the core notion that is operating at its heart and allaying the fears that sometimes surround it.
Posted by Professor Isabel Zuloaga Ríos (Pontificia Universidad Católica de Chile)
British Association of Comparative Law 
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