Pre-contractual Negotiations Research Articles

A PRIMER ON UKRAINIAN CONTRACT LAW VIEWED THROUGH THE PRISM OF CISG AND DCFR

The article is devoted to the analysis of DCFR and CISG, assessment of them as legal principles and social values, and thus establishing their importance for adapting the understanding of the essence of contract law of Ukraine to the European concept of private law. The article analyzes as topics of special interest the problems of contract formation, a doctrine on culpa in contrahendo, and standard terms or interchangeably general conditions. In this article, the author provides specific suggestions for improving the provisions of the Art. 650-1 UKR-CC concerning the liability for pre-contractual negotiations contrary to fair dealing. The application practice of UKR-CC is currently assessed positively, but the legal mechanisms of its action are subject to revision considering the experience of law enforcement and the interpretation of civil law by courts. Modern realities (economic, social, technical, informational) require legal certainty, because UKR-CC, like any codified act, possesses gaps and shortcomings in the presentation of legal material.

O‘ZBEKISTON RESPUBLIKASIDA STARTAPLAR FAOLIYATINI HUQUQIY TARTIBGA SOLISHNI TAKOMILLASHTIRISHNING ASOSIY YO‘NALISHLARI

In practice, innovations are recognized as the main driving force of economic growth and are an important factor capable of solving various problems, and creating conditions for sustainable development. In this article, the main directions for improving the legal regulation of startups in our country are listed and they are analyzed based on the experience of foreign countries. In particular, the article mentions the need to improve the regulatory framework in such areas as determining the position of startups in the implementation of innovation policy, further optimizing the legal protection of the results of intellectual activity, improving the institution of pre-contractual negotiations in startup activities and improving the system of state support for startups. The article provides scientific and legal justification for such issues as determining the status of startups by a separate law, improving the norms of legislation regarding the distribution of the right to the results of a state-funded startup between the state and the owner of the project, as well as the development of pre-contractual agreements between a venture investor and a startup, as well as granting startups various government benefits.

Illuminating the Development of Precontractual Liability

Abstract By using the tools of comparative law & economics, this article aims to shed a light on the development of precontractual liability. Precontractual liability sensu stricto is about the question to what extent one can be held liable for cost incurred by the other party preliminary to, or during precontractual negotiations, when negotiations fail. Comparative legal analysis has observed that the requirements for establishing a successful claim for precontractual liability are very similar at common law and at civil law despite the very different starting positions from which each legal system’s rules have developed. By finding correspondence between what comparative law has found and what is expected under an efficient legal system, this study provides empirical evidence for the efficiency hypothesis of law.

Does it matter what people lie about?

Should a lie in pre-contractual negotiations that is found immoral give a right to rescind a contract? Does it depend on the subject of a lie? These questions have been addressed by many legal philosophers and contractual theorists. However, the perspective of the key stakeholders (i.e., laypeople) has been largely missing. To understand how individuals assess the moral wrongfulness of lying in pre-contractual negotiations we performed two vignette studies. We also studied whether moral assessments differ from people’s judgments on how lies should be treated by law, i.e., whether the deceived party should have a right to rescind the contract. Finally, we test whether these differences depend on what negotiators lie about. We conducted two vignette studies (N = 832 and N = 181), in which we presented participants with scenarios describing business negotiations involving lying about various subjects. Our main result reveals that people are more likely to assess lies as immoral than to indicate that the deceived party should have a right to rescind the contract. This difference varies depending on the subject of a lie – the assessments diverge the most when sellers lie about product availability or alternative offers but are almost fully aligned in case of lies about the reservation price and the subject matter of a contract. We also show that the majority of respondents find lies about personal preferences, reservation price, and time pressure as well as lies by the buyer about having an alternative offer moral and do not think that such lies should lead to a voidable contract. In the second study, we further explored which factors people consider when assessing whether a lie should give a right to rescind a contract. We showed that indeed morality is not the only factor considered when evaluating legal consequences of lies, but that people do also take into account, for instance, the economic consequences of lies and existing negotiation practices.

Duress, Undue Influence and the Ethics of Pre-contractual Negotiation

This paper explores the doctrines of duress and undue influence in contract law. It traces the origins of the two doctrines, in an attempt to decipher their inner morality. Majority of the foundational contract law doctrines and principles rooted in the common law are now tempered with an assortment of equitable concerns and the law on undue influence is a perfect example, allowing courts to set aside putatively valid contracts if a sufficient level of unfairness is discovered to have characterised the pre-contractual negotiations. Over all, it is hoped that this paper shall shall be a valuable addition to the legal literature explicating the freedom of contract and the need for ethics in pre-contractual negotiations.

Equitable Estoppel in 'Subject to Contract' Negotiations

Waltons Stores (Interstate) Ltd v Maher was a watershed in the development of promissory estoppel in Australian law, recognising its reach to a representation of future intention from one party to another without the need for a pre-existing legal relationship between them. However, the scope for an equitable estoppel to arise from pre-contractual negotiations which do not result in a formal contract being executed, as in that case, remains unclear in certain respects. In particular, it is not clear whether or not a plaintiff seeking to establish an estoppel needs to have held a belief that the defendant was already bound by, or bound to enter into, the contract. On another view, it may be sufficient for the plaintiff to demonstrate that he or she was induced to assume that the contract would eventuate and then relied to his or her detriment upon that assumption, even if the plaintiff knew that the defendant had a right to withdraw from the negotiations. This article explores this uncertainty in Australian law about the nature of the assumption required to found an estoppel arising from pre-contractual negotiations which are said to be `subject to contract.

The Parol Evidence Rule in the Digital Age: Is Metadata Extrinsic Evidence?

In the modern twenty first century, technology is at the core of our every day lives. According to Cisco Executive Rob Soderbery, in 2012 the number of Internet connected devices totalled to approximately 8.7 billion. This number has continued to grow with the advent of less expensive tablets, computers, and mobile devices. With the modernization of daily activities, professional industries have had to adapt to technological advances. Within the legal industry, lawyers are utilizing programs such as Microsoft Word to draft contracts and specific functions, such as Track Changes, to follow work of their colleagues during the drafting process, with the digital contracts being transmitted to opposing counsel or clients. Although a seemingly efficient way to conduct “modern lawyering”, lawyers must remain cognisant of what lies beneath the contract, otherwise known as metadata, which can prove to stir conflict. Even with technology, centuries old rules still remain in modern contract law. This includes the admissibility or prevention of oral assurances and pre-contractual negotiations after the formation of a finalized contract. This rule is known as the parol evidence rule, which restricts for extrinsic evidence to be permitted. The purpose of this paper is to discuss if metadata can be considered as extrinsic evidence, with parties having the ability to rely on metadata to enforce the parol evidence rule. One considers whether a contradiction embedded within the metadata would trigger the rule. A systematic approach will outline the parol evidence rule and case law for and against the rule, as well as exceptions; followed by a definition of metadata and if it can be considered as extrinsic evidence. One will argue that metadata is not outside of the contract, but rather is embedded in the contract itself. Thus, parties cannot compare metadata to oral assurances or negotiations leading to the contract. To note, there is no current case law on point, however with expansion of this digital age, this topic remains one that must be addressed.

Transparency, trust and security: An evaluation of the insurer's precontractual duties

Transparency in insurance law attaches to the rights and duties of the parties, the relationships between insurers, insurance intermediaries such as agents and brokers, insurance supervisory law and insurance dispute resolution procedures. Regarding the rights and duties of the insurer and the prospective policyholder, it requires insurers to disclose precontractual information in a timely manner that is clear, understandable, legible and unambiguous. Transparency as a value is incredibly important in insurance contracts. This contribution focuses exclusively on the insurer's duty of disclosure during precontractual negotiations. Although the insured's duty of disclosure has enjoyed more attention in the past, the duty clearly applies to the insurance proposer as well as the insurer. The purpose of this contribution is to evaluate the nature and extent of the insurer's transparency duties as informed by both common and statutory laws.The insurer's duty is derived primarily from the statutory rights of access to information in accordance with the provisions of the Constitution of the Republic of South Africa and the Promotion of Access to Information Act. It is furthermore supported by specific insurance consumer protection law found in the detailed provisions on mandatory disclosures in the Financial Advisory and Intermediary Services Act, the Long-term Insurance Act, the Short-term Insurance Act and, finally, the Policyholder Protection Rules issued in accordance with these acts. Strict rules on advertising can be found in the General Code of Conduct issued under the FAIS Act.The Act furthermore specifically targets the activities of insurance intermediaries in precontractual disclosures. The fact that insurance products and services have been exempted from the scope of the Consumer Protection Act from 28 February 2014 should not diminish the insured's right to rely on universal consumer protection principles as envisaged by South African insurance legislation. The insurer's duty to disclose is in the last instance also derived from the common law duty not to make misrepresentations by commission or omission. When negotiating an insurance contract, the insurer's duty to speak is not based on a general requirement of bona fides, but is recognised as an ex lege duty due to the involuntary reliance of the prospective insured on information supplied by insurers in the market. A lack of transparency should lead to the insurer's accountability. A failure to disclose material information or a disclosure of false information that goes to the root of the matter and that induces the prospective policyholder to buy the insurance product is recognised as an actionable misrepresentation. Statutory provisions do not diminish the common-law duty not to make misrepresentations, but provide details of the nature and extent of the information duty to provide clarity and legal certainty in the determination of the standards of transparency required in law. In addition, statutes provide for enforcement actions by regulators, orders that could affect the licence of the insurer and provide for punishable offences and penalties. In terms of common law, a misrepresentation by omission or commission renders the insurance contract wholly or in part voidable. The policyholder may decide to rescind the contract and claim restitution. He may also, in conjunction with rescission, or as an alternative when deciding to maintain the contract, claim delictual damages or even constitutional damages when judged by a court of law as appropriate relief. Statutory remedies include a monetary award by the Insurance Ombud. Even though such an award is capped at R800 000, it is submitted that it is preferred to a civil law damages claim.

Estoppel by Convention and Pre-Contractual Understandings: The Position and Practical Consequences

Recently, the House of Lords held in Chartbrook Ltd v Persimmon Homes Ltd that an understanding or common assumption reached by contracting parties in the course of their pre-contractual negotiations, including "an assumption that certain words will bear a certain meaning" can provide the basis for an estoppel by convention claim. This was reaffirmed by the New Zealand Supreme Court in Vector Gas Ltd v Bay of Plenty Energy Ltd. Both the House of Lords and the Supreme Court assumed that this was well established. Given that the issue was unsettled in England and with two divergent lines of authority in Australia, the House of Lords and Supreme Court should not have assumed this. In light of this development in the law, it is also argued that where the evidence proves that the parties established an understanding as to the meaning of a term in a proposed contract, then surely that is the meaning of that term, as a matter of interpretation. In addition, allowing consideration of pre-contractual negotiations to prove an estoppel by convention has undermined the rule that pre-contractual negotiations are inadmissible as an aid to interpretation of a contract.

NATURALEZA DE LA RESPONSABILIDAD PRECONTRACTUAL (CULPA IN CONTRAHENDO) EN LA ARMONIZACIÓN JURÍDICA EUROPEA

This article examines the nature of culpa in contrahendo with special attention to precontractual agreements. This is currently a controversial aspect in European countries in the scope of the European juridical harmonization. The modern legal focus in the European national Law is very different and there are relevant differences among those who consider culpa in contrahendo in the scope of Contracts and those who place it with crime or quasicrime or even those who consider it as tertium genus. Academic work for the harmonization of the European civil law, such as the Draft Common Frame of Reference (DCFR) or the Principies of European Contract Law (PECL) have adopted the principie of good faith applicable to precontractual negotiations and their consequences, but these pieces of work do not clarify the nature of this liability nor do they explicitly use the expression culpa in contrahendo. The European Regulation regarding the applicable law to non-contractual obligations (Rome II) reflects a specific norm about culpa in contrahendo. This liability is regarded as an autonomous concept thought of only for the European Law and, despite the fact that the rule of conflict applied to non-contractual obligations according to this regulation is the law of the place where the tort has been committed, the law that shall apply to the suppositions of culpa in contrahendo will be the contract law.

Uncertainty, Reliance, Preliminary Negotiations and the Hold Up Problem

Recently, two scholars, Alan Schwartz and Robert Scott, have cast doubt on the conventional view that courts would find liability and award reliance damages in precontractual cases that resembled the famous Hoffman v. Red Owl case. They have argued that courts deny recovery for reliance in cases involving precontractual preliminary negotiation but regularly grant reliance recovery following a preliminary agreement. They identify a pattern or sequence in which success is likely and then provide an analytical framework to justify liability. When parties reach a preliminary agreement that also includes an agreement that they both invest simultaneously and one party strategically delays investment for personal gain, the law permits the investing party to recover for reliance expenditures when the other party walks away from the deal. Courts find this sequence of events to constitute a breach of the good faith obligation that governs parties' actions in preliminary agreements.Based on an extensive review of the reliance case law, this article suggests that contrary to the Schwartz and Scott thesis, courts do grant recovery for reliance expenditures made in precontractual preliminary negotiations resembling Hoffman even when the parties have not reached an agreement.Their willingness to do so depends on a pattern in which the promisor solicits reliance expenditures to reduce uncertainty or to hedge his bets pending the resolution of uncertainty and the promisee relies, particularly if the reliance investment takes the form of a cooperative investment rather than a selfish investment. The same risk of hold up is present whenever there is sequential investment. Thus, this article suggests that the courts are willing to grant recovery for reliance expenditures in both categories of cases (1) precontractual negotiations with no agreement and (2) reliance that follows a binding preliminary agreement to control a unified threat of opportunistic behavior and to regulate the hold up problem as a way of maximizing welfare.

Good Faith in Precontractual Negotiations: A Franco-German-American Perspective

An offeror initiates negotiations to acquire a target company. The parties sign an exclusivity agreement, restricting them from dealing with third parties for a specified period of time. They execute a term sheet, laying out the principle terms of the contemplated definitive agreement, yet providing that the parties will be under no obligation to one another should they fail to strike a deal. After several negotiating sessions, the discussions break down and the offeror ultimately proceeds to acquire a different company. Can the target company sue the offeror for breach of good faith in negotiations, despite contractual safeguards in the preliminary agreements? Can it do so if there were no preliminary agreements? This article examines the bases for liability arising from unsuccessful contractual negotiations under United States, French and German law.

House of Lords, 19 November 2003, Shogun Finance Limited v. Hudson - Effect of Fraudulent Misrepresentation on the Formation of a Contract

In order to obtain possession of a car under a hire-purchase agreement with the claimant firm, a person who can only be described as a fraudster availed himself of a false identity, i.e. that of a Mr. Patel. The firm concerned, Shogun Finance, performed all the necessary identity and credit checks in relation to the Mr. Patel. The defendant duly paid a deposit, and the dealer delivered the vehicle to the fraudster. The latter then sold the car to a third party, one Norman Hudson, and disappeared with the money. Once it appeared that the fraudster had defaulted on the agreement, the claimants demanded that the vehicle be returned to them. Under S. 27 of the Hire Purchase Act 1964, Mr. Hudson could have retained the car lawfully if he could prove that the agreement between the rogue and Shogun was merely voidable by the latter. If, on the other hand, the contract had been void ab initio, the hapless Mr. Hudson would be compelled to return the vehicle to the claimants. The House of Lords, by a majority of 3 to 2, awarded the action to Shogun. The basis for their ruling was that, since the pre-contractual negotiations had not been conducted on a face-to-face basis, and since the circumstance of Mr. Patel being the purchaser was fundamental to Shogun, no contract could have been made since no agreement had been reached. Had the negotiations taken place on a face-to-face basis, the Law Lords would probably have found in favour of Mr. Hudson. In a dissenting opinion, Lords Millett and Nicholls of Birkenhead opined that, in today?s world of customer identification and credit checks, it was impossible to make a distinction between negotiations conducted face-to-face and those which took place by telephone, fax or even videolink.

A Role For Tort In Pre-Contractual Negotiations? An Examination Of English, French, And Canadian Law

The common law has traditionally regarded the question of pre-contractual liability as a matter of contract formation.2 Where the claimant is able to satisfy the rules of offer and acceptance, consideration, an intention to be bound, and certainty, contract law possesses a number of tools capable of resolving disputes arising prior to contract. For example, the courts will utilise the law of misrepresentation and mistake and, if necessary, imply terms to respond to questions such as the effect of pre-contractual representations or whether the claimant should be paid for work commenced prior to contract.3 Notably where a transaction between two commercial parties has been executed, the English courts have shown themselves particularly willing to intervene and ensure the validity of the agreement reached between the parties.4

Classifying precontractual liability: a comparative analysis

The common law has solved questions of liability arising in the context of precontractual negotiations by resort to a range of different doctrines and approaches, adopting in effect ‘piecemeal’ solutions to questions of precontractual liability. Consequently, debate has arisen as to how best to classify or categorise claims for precontractual work and as to which doctrines are best suited to solving problems arising from anticipated contracts. The purpose of this article is to consider this question of how best to classify (cases of) precontractual liability. The initial focus will be on the ongoing debate as to whether principles of contract law or principles of unjust enrichment can better solve problems of precontractual liability. I will be suggesting that unjust enrichment theory offers little by way of explanation of cases of precontractual liability and, indeed, draws on principles of contract law in determining questions of liability for precontractual services rendered, though it does so by formulating those principles under different guises. Irrespective, however, of the doctrines utilised by the common law to impose liability, it is possible to identify a number of common elements unifying all cases of precontractual liability. In identifying such common elements of liability, it is necessary to draw on principles of both contract and tort law. How, then, should cases of precontractual liability best be classified? A consideration of the issue of classification of precontractual liability from a perspective of German civil law will demonstrate that a better understanding of cases of precontractual liability will be gained by classifying such cases as lying between the existing categories of contract and tort.

Precontractual Duties of Disclosure: A Comparative and Economic Perspective

If during precontractual negotiations a person deliberately keeps quiet about facts which he knew or should have known were of particular importance to the other party that party may avoid the contract on the ground of deceit if, and only if, a duty of disclosure can be found to exist. What are the conditions that must be satisfied to assume the existence of such a duty of disclosure? The European legal systems merely offer vague formulas with little or no operational power. Can economic theory provide more precise criteria? The general principle should be that a negotiating party must proffer information in his possession which is material to the other party's decision. However, economic analysis suggests that a party should be allowed to withhold material information if the information is “productive” and was costly to obtain unless its acquisition and disclosure were owed under a contract for value. These rules are discussed in the light of a number of cases from various European jurisdictions.

The Applicable Law in International Arbitration Under the New English Arbitration Act 1996

FOR OVER the past 50 years there has been a discernible movement both in public and private international law away from dependence on states. The multiplication of accredited actors in international law and recognized sources of international norms, the increasing autonomy of international law vis-a-vis its authors, together with the diminishing importance of sovereignty and a new appreciation of legal pluralism broadening nationalist definitions of what counts as ‘law’, all mark the decline of the role of the state. This modern trend has been evident in international commercial arbitration where legal phenomena such as the evolution of a new lex mercatoria , the use of principles of general application derived from techniques of comparative law, delocalization and the growing recognition of the specificity of international transactions as distinct from purely domestic contracts, can be seen as responses to the limitations of statist conceptions of the definition, sources and interpretation of law in the resolution of international disputes. Following these developments, the new English Arbitration Act 1996 freed commercial parties from national constraints of procedural law with the result that fundamental English rules no longer necessarily apply in arbitral proceedings in England: discovery, hearsay, parol evidence and rules excluding evidence of pre-contractual negotiations. All the more so in international proceedings involving parties from different legal cultures. The object of these reforms has been, of course, in the words of Lord Saville, ‘to reflect generally accepted international views on the proper conduct of the arbitral process’.1 The new law affords a very high degree of accommodation to the parties' choice of institutional or foreign procedural rules. Apart from a few mandatory provisions,2 parties are free to exclude large parts of the Arbitration Act itself in order to adopt procedures they are more familiar with, or which they believe are best …

Restitution where an Anticipated Contract Fails to Materialise

The Modern Law ReviewVolume 59, Issue 1 p. 111-116 Free Access Restitution where an Anticipated Contract Fails to Materialise Justin Mannolini, Justin Mannolini Barrister and Solicitor of the Supreme Court of Western Australia.Search for more papers by this author Justin Mannolini, Justin Mannolini Barrister and Solicitor of the Supreme Court of Western Australia.Search for more papers by this author First published: January 1996 https://doi.org/10.1111/j.1468-2230.1996.tb02069.xCitations: 1 AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume59, Issue1January 1996Pages 111-116 RelatedInformation

Pre-contractual negotiations in English Law: Walford v Miles and its aftermath

Pre-contractual negotiations in English Law: <i>Walford v Miles</i> and its aftermath