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Formation of contracts
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Description of the 2 steps for the formation of contracts. differences between pre-contractual and contractual liabilities.
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11. Lesson 11Friday, 4 February 2022 11:39
Formation of a contract in 2 phases:
1. Negotiations - the contract is not concluded yet, the parties are not bound to its term
of contract and good faith)
Good faith/duty of fairness: set of behaviours, controlled by the law, to avoid inj
reach the best social achievement —> general obligation to behave following the
principle —> logic behaviour that sees its application case by case
Since it’s not specific, we can say that it’s an obligation without specific perform
The party who has behaved contrary to fair dealing run into pre-contractual liab
is a legal principle, since it has been imported in the legal system
Pre contractual liability:
○ Sudden and unjustified broken off of negotiation
○ Fraud aimed at closing a contract with unfair terms
○ Breach of confidentiality - sensible info must remain private
○ Lack on info on some reason of invalidity of the contract (ex. I want to sell a pub
not possible —> but I don’t share this info)
○ Entering into negotiations with no real intentions to reach an agreement
Ex. Italian civil code
Art.1337 Negotiations and pre contractual liability - the parties in the conduct of negot
formation of the contract, shall conduct themselves according to good faith
Ex: European contract Law
Art. 2:301 Negotiation contrary to good faith - 1. A party is fee to negotiate and
failure to reach an agreement 2. However a party who has negotiated or broken
contrary to good faith and fair dealing is liable for the losses caused to the other
contrary to good faith and fair dealing, in particular, for a party to enter into neg
real intention of reaching an agreement with the other party.
—> it includes all the cases seen previously
Pre contractual liability ≠ contractual liability
Liability for unfair dealing Liability for the breach of the con
Compensation of damages Compensation of damages
Reliance interest Performance interest
Reliance interest (not contractual) —> wasted Performance interest —> loss pro
expenditure - pre contract expenditure —> lost performance promised but never
time, expenses incurred for the negotiations —> recovery of the expenditures and
reliance expenditure on the transaction
Reliance expenditure= sort of expectation losses -
loss profits for the other transactions which the
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