Encyclopedia of Private International Law
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Encyclopedia of Private International Law

Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio

The role and character of Private International Law has changed tremendously over the past decades. With the steady increase of global and regional inter-connectedness the practical significance of the discipline has grown. Equally, so has the number of legislative activities on the national, international and, most importantly, the European level. With a world-class editor team, 500 content items and authorship from almost 200 of the world’s foremost scholars, the Encyclopedia of Private International Law is the definitive reference work in the field. 57 different countries are represented by authors who shed light on the current state of Private International Law around the globe, providing unique insights into the discipline and how it is affected by globalization and increased regional integration. The Encyclopedia consists of three inter-linked pillars, enhanced by sophisticated search and cross-linking functionality. The first pillar consists of A-Z coverage of the scope and substance of Private International Law in the form of 247 entries. The second pillar comprises detailed overviews of the Private International Law regimes of 80 countries. The third pillar presents valuable, and often unique, English language translations of the national codifications and Private International Law provisions of those countries. This invaluable combination represents a powerful research tool and an indispensable reference resource.
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Chapter C.33: Culpa incontrahendo

Dário Moura Vicente

I. Concept and notion

The concept of culpa in contrahendo, or ‘fault in contracting’, refers to wrongful acts or omissions occurring during contractual negotiations or the conclusion of a contract, resulting in damage suffered by one of the parties. The liability so arising is designated as ‘pre-contractual liability’ (Vorvertragliche Haftung, responsabilité précontractuelle, responsabilità preconttratuale) in order to distinguish it from both contractual liability, which attaches to the non-performance of contractual obligations, and from liability in tort, which typically arises from harm inflicted upon a person with whom the injurer had no previous dealings. Various fact patterns may trigger liability for culpa in contrahendo, namely: (i) breach by one of the parties of its pre-contractual duties of information towards the other party, eg by providing false information or by omitting relevant information concerning the subject matter of the contract; (ii) negligent causation by one of the parties or its employees of an injury to the person or property (→Property and proprietary rights) of the other party in the course of contractual negotiations or on the occasion of conclusion of the contract, in breach of duties of care or protection towards that party; (iii) an unjustified breaking off of contractual negotiations by one of the parties due to which the other party suffers a financial loss consisting notably of wasted expenses or other forgone contractual opportunities; and (iv) invalidity of a contract caused by one of the parties, eg due to a mistake of its own. Different rules apply to this form of liability depending on the fact pattern in question.

II. Purpose and function

Liability for culpa in contrahendo may serve various purposes. On the one hand, it is a powerful means of ensuring the correct formation of each party’s will to conclude a contract. On the other hand, it protects parties’ reliance in p. 491the conclusion of a valid and enforceable contract. Finally, in some legal systems it operates as a form of enabling the compensation of →damages that would otherwise not be compensated according to the general rules of tort law. Examples here are pure financial loss due to negligent misstatements made in the pre-contractual stage or alternatively physical damage negligently inflicted by an employee of one of the parties during contract negotiations, for which no vicarious liability of the employer attaches. Culpa in contrahendo may accordingly be characterized either as an institution ancillary to contract, or as an autonomous reliance-based form of liability or as a surrogate for tort liability. These different characterizations play a central role in the settlement of private international law issues raised by wrongful conduct occurring in trans-border contractual negotiations (see below V.1.).

III. Historical development

The ‘discovery’ of liability for culpa in contrahendo is generally attributed to Rudolph von Jehring. In an essay published in 1861 (‘Culpa in contrahendo oder Schadensersatz bei nichtigen oder nocht zur Perfektion gelangten Verträgen’ [1861] JherJb 1–112), this German author raised the issue of whether a party that caused the invalidity of a contract due to its own mistake should compensate the damage thus caused to the other party. For Jhering, a negative answer to this question would be unfair because the party at fault incurs no liability and the innocent party would be the victim of another’s culpa. According to Jhering ‘any such mistake is inexcusable; he who promises something should not err, he errs at his own cost, not at the expense of the other party’. The liability of the erring party towards the other contracting party would thus be based upon its culpa in contrahendo. This consists, according to Jhering’s definition, in the failure by a party that negotiates with a view to concluding a contract to exercise the necessary care (diligentia). In fact, Jhering wrote, ‘he who enters into a contract thereby passes from the realm of purely negative duties of the non-contractual trade into the positive contractual sphere, from the domain of pure culpa in faciendo into that of culpa in non faciendo, the positive diligentia, and the first and foremost duty that he thereby undertakes is that of exercising the necessary care already at the contracting stage’. On the other hand, Jhering noted ‘not only the already existing contractual relationships, but also those that are in the process of being constituted must be under the protection of the rules concerning culpa, otherwise contractual dealings would be left exposed in this most sensitive aspect and every contracting party would be subject to the danger of being a victim of someone else’s negligence’. Jhering thus laid the foundations of the theory according to which during the pre-contractual stage parties are bound by a statutory obligation (gesetzliches Schuldverhältnis) consisting of certain duties of conduct, the non-performance of which entails liability for the damage thereby caused to the other party. He summarized the conceptual basis of that theory as follows: ‘The command of contractual diligentia is valid both for already born and for nascent contractual relationships, an infringement thereof justifies here and there the contractual claim for compensation.’ According to Jhering, liability for culpa in contrahendo thus attaches in contract. ‘The claim for compensation’, he wrote, ‘is based upon a contractual obligation’ (eine contractliche Verbindlichkeit). This was a consequence of the fact that pure economic losses (ie losses independent of any physical damage to the person or property of the victim) caused by negligence were excluded from the scope of tortious liability, in view of the deeply negative consequences that the opposite rule would entail from the point of view of individual freedom. ‘Where would it lead’, he noted, ‘if anyone in simple non-contractual relationships could be held liable both for dolus and culpa lata! An incautious statement, the disclosure of a rumour, a false piece of news, a bad advice, an imprudent judgment, the recommendation of an undeserving maid by her previous employer, information on a route, the time, etc., requested by a passerby, in short, everything would engage, in case culpa lata occurred and in spite of all good faith, liability for the damage thus caused, and the act. de dolo would with such an expansion become a real scourge of dealings and trade.’

This restrictive notion of tort law prevailed in the German Civil Code of 1900 (Bürgerliches Gesetzbuch of 2 January 2002, BGBl. I 42, as amended, originally from 18 August 1896, RGBl. 195, henceforth German CC), which rejects compensation for negligently inflicted economic loss not resulting from damage to the life, body, health, freedom, property or other right (sonstiges Recht) of the injured p. 492person, or from the breach of a statutory provision intended for the protection of others (Schutzgesetz). The Code further allows masters to escape liability for damage caused by their servants’ tortious conduct provided they employ the necessary care in the servants’ selection and supervision. These rules largely account for the extraordinary development of culpa in contrahendo in German law during the 20th century, as well as for the jurisprudential creation of other categories, such as ‘post-contractual liability’ (culpa post pactum finitum), ‘factual contracts’ (faktische Vertragsverhältnisse) and ‘contracts with protective effects in regard of third parties’ (Verträge mit Schutzwirkung für Dritte). Such categories enable courts to apply contract rules to situations originally not covered by them, such as the negligent causation of physical injury to one of the parties by an employee of the other party during the pre-contractual stage.

Jhering’s concept of liability for culpa in contrahendo was expressly upheld by the German Federal Court of Justice (BGH), 20 June 1952, 6 BGHZ 330, which defines it as ‘a form of liability which is based upon a statutory obligation created in addition to written law which has its origin in the commencement of contractual negotiations and requires that both parties observe the usual care in their dealings with each other’. That concept was gradually extended to new categories of situations in subsequent BGH rulings.

The culpa in contrahendo theory is reflected in the social ethos that has run through German law since the Prussian monarchy. In the early 20th century, it crossed German borders and influenced legal thinking elsewhere in continental Europe, finding fertile ground for further developments. A case in point was Italy, where Gabriele Faggella (‘Dei periodi precontrattuali e della loro vera ed esatta costruzione scientifica’, in Studi Giuridici in Onore di Carlo Fadda, vol 3 (Luigi Pierro 1906) 271–342) first held that, by entering into contractual negotiations, parties expressly or tacitly agree upon the expenditures necessary to conduct them. The unwarranted interruption of such negotiations by one of the parties should therefore entail the duty to compensate the other party’s expenses. Culpa in contrahendo thus encompassed a further set of cases not originally contemplated by Jhering.

IV. Legal sources

1. National

In the absence of any express recognition, in general terms, of culpa in contrahendo in the original version of the German Civil Code, its normative basis was held to be para 242(2) German CC, according to which ‘An obligor has a duty to perform according to the requirements of good faith, taking customary practice into consideration.’ With the modernization of the German Law of Obligations in 2002, culpa in contrahendo found its way into the Civil Code’s provisions. In fact, para 311(2) now states that ‘An obligation with duties under para 241(2) also comes into existence by (1) the commencement of contract negotiations.’ Paragraph 241(2) declares in turn that ‘An obligation may also, depending on its contents, oblige each party to take account of the rights, legal interests and other interests of the other party.’ Liability for the breach of pre-contractual duties attaches by virtue of para 280(1), according to which ‘If the obligor breaches a duty arising from the obligation, the obligee may demand damages for the damage caused thereby.’ Specific duties of conduct are thus imposed by German law during the negotiation and the conclusion of contracts. These duties create a legal relationship that comes into existence upon the entry into negotiations. Failure to comply with them gives rise to the duty to compensate damage thus caused under the rules of contractual liability.

A more mitigated approach is adopted in some other civil law systems. For example both the Italian and Portuguese systems provide for the existence of certain pre-contractual duties of conduct based on the principle of good faith. In fact, art 1337 Italian Civil Code (Codice Civile, Gazz.Uff. 4 April 1942, No 79 and 79bis; edizione straordinaria, as amended) states that ‘Parties should act according to good faith in the negotiation and formation of the contract.’ And according to art 227(1) Portuguese Civil Code (Código Civil of 25 November 1966, Decreto Lei No 47-344, as amended) ‘He who negotiates with someone else to conclude a contract must, both in its preliminaries and in its formation, act in accordance with the rules of good faith or otherwise compensate the damage culpably caused to the other party.’ German influence is apparent in both provisions. Nevertheless, these systems apply contractual or tortious rules to the liability ensuing from p. 493the breach of the said duties, depending upon the nature of the facts and issues raised. Thus, for example, the limitation period laid down in tort law rules is applicable to claims of pre-contractual liability; but it is for the defendant, as any contractor, to exculpate himself. This hybrid regime is possible due to the fact that German restrictions on tort law have no parallel in Italian and Portuguese law.

A different view has prevailed in common law systems, which only allow recovery for damage caused in contrahendo under the rules of tort law, notably those concerning misrepresentation. Admittedly, in the United States a specific form of reliance-based liability known as promissory →estoppel is exceptionally allowed by the Restatement Second of Contracts (American Law Institute, Restatement of the Law, Second: Law of Contracts, St Paul 1981; →Restatement (First and Second) of Conflict of Laws), para 90(1) of which states that ‘A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.’ However, a general duty to act in accordance with good faith during contractual negotiations that would preclude parties from abandoning them has not found acceptance in those systems. As Lord Ackner stated in Walford v Miles ([1992] 1 All ER 453), ‘the concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations. Each party to the negotiations is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations. . . . A duty to negotiate in good faith is as unworkable in practice as it is inherently inconsistent with the position of a negotiating party. It is here that the uncertainty lies. In my judgment, while negotiations are in existence either party is entitled to withdraw from these negotiations, at any time and for any reason. There can be thus no obligation to continue to negotiate until there is a “proper reason” to withdraw.’ English law’s concern with individual freedom is evident here. There is no fundamental difference in the United States, where contractual negotiations are outside the scope of the duty of good faith adopted in the Uniform Commercial Code and in the Restatement Second of Contracts.

2. International

The significant expansion of international trade in recent decades and the increasing complexity of contractual negotiations in cross-border dealings have brought culpa in contrahendo to the forefront of efforts aimed at the international unification of private law. Proposals for the adoption of a general provision on pre-contractual liability in →CISG (United Nations Convention of 11 April 1980 on Contracts for the International Sale of Goods, 1489 UNTS 3) were, however, rejected during its preparatory works. The absence of an express recognition of this doctrine in common law jurisdictions, as well as fears of the uncertainty it might cause if adopted in the Convention, played an important role in that outcome. Admittedly, art 7(1) CISG states that ‘In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.’ Good faith thus obtained a certain degree of recognition in the Convention. However, it operates essentially as a standard of interpretation of its provisions, rather than an autonomous source of pre-contractual duties, the contents and scope of which would be extremely difficult to determine, given the differences persisting between national legal systems in this regard. Liability for damage caused to a party during contractual negotiations is therefore subject, according to the prevailing view among Convention commentators, to the domestic law applicable by virtue of the rules of private international law, as determined by art 7(2) CISG. The Convention should, however, be taken into consideration to a limited extent in the adjudication of claims of pre-contractual liability. In fact, when the revocation of a contractual offer governed by the Convention is not allowed under art 16, contractual liability of the promisor attaches to the failure to effect the offered performance. The applicability of domestic rules on culpa in contrahendo is thus excluded in such cases.

A somewhat bolder approach was adopted in the UNIDROIT Principles of International Commercial Contracts (International Institute for the Unification of Private Law/Institut international pour l’unification du droit privé, UNIDROIT Principles of International Commercial Contracts 2010 (3rd edn, UNIDROIT 2010)), which state that ‘Each party must act in accordance with good faith p. 494and fair dealing in international trade’ (art 7(1)), and lay down several corollaries of this principle. Thus, an offer cannot be revoked ‘if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer’ (art 2.4(2)(b)); further ‘A party who negotiates or breaks off negotiations in bad faith is liable for the losses caused to the other party’ (art 2.15(2)), with bad faith in particular being ‘for a party to enter into or continue negotiations when intending not to reach an agreement with the other party’ (art 2.15(3)); ‘Where information is given as confidential by one party in the course of negotiations, the other party is under a duty not to disclose that information or to use it improperly for its own purposes, whether or not a contract is concluded subsequently’ (art 2.16); and a party who knew or ought to have known of a ground for avoidance of the contract is liable for damages ‘so as to put the other party in the same position in which it would have been if it had not concluded the contract’ (art 3.18). However, these principles are far from restating universally accepted rules, and their applicability is dependent upon their being chosen by the parties. This may only take place to the extent permissible under the relevant conflict of laws rules.

3. European

The notion of good faith obtained limited recognition in EU law through Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (Unfair Terms Directive [1993] OJ L 95/29), art 3(1) of which states that ‘A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’ According to the Directive preamble, ‘the requirement of good faith may be satisfied by the seller or supplier where he deals fairly and equitably with the other party whose legitimate interests he has to take into account’. A pre-contractual duty of fair dealing is therefore implicit in this provision. However, the Unfair Terms Directive does not require Member States to create an obligation to compensate damage caused by the breach of such a duty, but rather that ‘unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer’ (art 6(1)).

The Proposal for a Regulation on a Common European Sales Law (Proposal of 11 October 2011 for a Regulation of the European Parliament and of the European Council on a Common European Sales Law COM(2011) 635 final) goes considerably further, in that this law provides in art 2(1) that ‘Each party has a duty to act in accordance with good faith and fair dealing’ and in art 2(2) that ‘Breach of this duty may preclude the party in breach from exercising or relying on a right, remedy or defense which that party would otherwise have, or may make the party liable for any loss thereby caused to the other party.’ Pursuant to art 2(3), ‘The parties may not exclude the application of this Article or derogate from or vary its effects.’ Good faith and fair dealing are defined by art 2(b) of the draft Regulation as ‘a standard of conduct characterized by honesty, openness and consideration for the interests of the other party to the transaction or relationship in question’. →CESL is, however, intended to be an optional instrument that may apply to cross-border contracts only to the extent it is chosen by the parties within the scope of the respective national law in turn applicable pursuant to the relevant conflict-of-law rules. Its effect of harmonizing EU Member States’ legal systems with regard to culpa in contrahendo issues is therefore limited.

V. Private international law problems

In spite of the above initiatives aimed at laying down uniform rules on culpa in contrahendo, considerable differences subsist between national legal systems in this regard. Thus, in most international situations the disposition of claims for the compensation of damage caused by the breach of pre-contractual duties of conduct involves the determination of the applicable law through conflict-of-law rules. This raises a number of complex issues, given the hybrid nature of this form of liability, situated at the interface between contractual and non-contractual obligations. The same may be said about the determination of the internationally competent court.

1. Classification issues

In order to determine the competent court as well as the law applicable to claims for p. 495compensation of damage inflicted through culpa in contrahendo, the applicable conflict of jurisdictions and conflict-of-laws rules must first be determined. An issue of classification thus arises with regard to such claims.

In relation to the international jurisdiction of courts, this issue was addressed by the ECJ in its 17 September 2002 ruling (Case C-334/00, Fonderie Officine Meccaniche Tacconi SpA v Heinrich Wagner Sinto Maschinenfabrik GmbH [2002] ECR-I 7357), in which it stated that ‘the expression matters relating to contract within the meaning of Article 5(1) of the Brussels Convention is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another’. In this case there appeared to be no obligation freely assumed by the defendant towards the claimant. On the contrary, the Court said that ‘the obligation to make good the damage allegedly caused by the unjustified breaking off of negotiations could derive only from breach of rules of law, in particular the rule which requires the parties to act in good faith in negotiations with a view to the formation of a contract’. Hence, the Court concluded ‘In circumstances such as those of the main proceedings, characterized by the absence of obligations freely assumed by one party towards another on the occasion of negotiations with a view to the formation of a contract and by a possible breach of rules of law, in particular the rule which requires the parties to act in good faith in such negotiations, an action founded on the pre-contractual liability of the defendant is a matter relating to tort, delict or quasi-delict within the meaning of art 5(3) [Brussels] Convention.’

A delictual classification of claims based upon culpa in contrahendo has equally prevailed in the Rome I Regulation (Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), [2008] OJ L 177/6; →Rome Convention and Rome I Regulation (contractual obligations)) governing conflicts of laws that arise from contractual obligations, art 1(1)(i) of which excludes from its scope of application ‘obligations arising out of dealings prior to the conclusion of a contract’, and in the →Rome II Regulation (non-contractual obligations) (Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), [2007] OJ L 199/40) on conflict of laws arising from non-contractual obligations in civil and commercial matters, which states in art 2(1) that damage referred to in it ‘shall cover any consequence arising out of tort/delict, →unjust enrichment (restitution), negotiorum gestio or culpa in contrahendo’.

Nevertheless, art 12(1) of the Rome II Regulation expressly states that ‘The law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract, regardless of whether the contract was actually concluded or not, shall be the law that applies to the contract or that would have been applicable to it had it been entered into.’ By way of an ‘accessory connection’ (rattachement accessoire), this Regulation has thus considerably mitigated the effects of the classification of claims for compensation of damage caused by culpa in contrahendo as non-contractual obligations, and it has recognized that the proper law of liability based upon culpa is in principle the lex contractus or the lex hypothetici contractus.

Certainly, the concept of ‘contractual obligation’ as adopted in the Rome I Regulation should be understood as basically meaning the duty to perform a contractual promise and the promisee’s power to demand its performance, as well as the duty to compensate damage caused by its non-performance. This autonomous interpretation of that concept can be derived from the solutions embraced in the Regulation’s basic choice-of-law rules. In fact, it is with regard to those duties that the interests of the parties prevail and that therefore the →connecting factors adopted in arts 3 and 4 of the Regulation, especially →party autonomy, seem appropriate. However, the scope of the Regulation is not strictly confined to obligations arising from the will of the parties: pursuant to art 12(1)(e), it also includes certain ex lege obligations, such as the return of money paid by one of the parties to the other in the case of nullity of the contract.

Duties of conduct functionally connected with the conclusion of contracts or the performance of contractual promises, such as pre-contractual duties of disclosure and loyalty that aim at ensuring the correct formation of the parties’ will, as well as the duty to compensate for damage inflicted through their non-performance, should be governed by the law designated by the Rome I Regulation, even if they derive from the law rather than the parties’ will. In fact, the application of the proper law p. 496of the envisaged contract to claims of pre-contractual liability allows the submission to the same law of closely connected relationships (ie the pre-contractual relationship and the duty to compensate for damage arising from the non-performance of the duties of conduct that integrate it, on the one hand, and the contractual relationship aimed at by the parties on the other), thus ensuring a certain degree of unity of their legal regulation. This solution also seems appropriate if one considers the structure of these relationships and the analogies that they present. Indeed, pre-contractual relationships consist of specific duties to perform and the corresponding right to demand their performance, which bind determined or determinable persons, as is the case of contractual relationships. Both from a functional and a structural perspective, their proper law should therefore in principle be determined in accordance with the conflict-of-laws rules governing contractual obligations.

According to art 12(2)(a) of the Rome II Regulation, it is only where the applicable law cannot be determined on the basis of para 1, eg because the negotiations have ended at an early stage, that the law of the country in which the damage occurred will apply. Where the parties had their habitual residence in the same country at the time when the event giving rise to the damage occurred, the law of that country applies pursuant to art 12(2)(b); if the non-contractual obligation arising out of dealings prior to the conclusion of a contract is manifestly more closely connected with another country, the law of that country may also apply according to art 12(2)(c). In such cases, the proper law of culpa in contrahendo is thus basically the same one that governs tort liability under art 4. This solution also seems appropriate in the case of a breach of pre-contractual duties of conduct that are not functionally connected with the conclusion of the envisaged contract, such as pre-contractual duties of care and protection regarding the person and property of the other party, breach of which is likely to cause the kind of harm that tort law typically seeks to prevent and redress. Claims based upon the breach of those duties should therefore be classified as tortious and submitted to the law designated by art 4. This is in accordance with Recital 30 of the Rome II Regulation, which declares that ‘Article 12 covers only non-contractual obligations presenting a direct link with the dealings prior to the conclusion of a contract.’ The concept of culpa in contrahendo adopted in art 12 of the Rome II Regulation is thus autonomous from the Member States’ domestic laws and does not necessarily comprise all categories of situations included in it according to their legal systems.

Non-performance of pre-contractual duties of conduct arising from preliminary agreements concluded by the parties, which are governed by the Rome I Regulation, is also excluded from the scope of art 12.

In light of the above, a uniform classification of claims for compensation based upon culpa in contrahendo is not possible. Rather, a differentiation according to the pre-contractual duties of conduct allegedly breached should be made in order to determine the conflict rule under which such claims fall.

2. The determination of the applicable law

Particular difficulties may arise in the determination of the applicable law according to the above rules. This is the case where the law applicable to pre-contractual liability is, in accordance with art 12(1) of the Rome II Regulation, combined with art 3(1) of the Rome I Regulation, the law chosen by the parties to govern the envisaged contract. If the parties had not yet entered into a contract when →damages in contrahendo arose, eg because negotiations were broken off, that law may be difficult to ascertain. A choice of the law governing the contract may, however, be inferred from a preliminary contract, such as a framework agreement (contrat-cadre, Rahmenvertrag), a letter of intent or a memorandum of understanding.

Regarding ‘tortious’ claims of culpa in contrahendo, such as those arising from bodily injury caused by one of the negotiating parties to the other in breach of pre-contractual duties of care, the lex damni in principle applies by virtue of art 4(1). If, however, the parties had their habitual residence in the same country at the time when the damage occurred, the law of that country applies according to art 4(2). If the breach of pre-contractual duties is manifestly more closely connected with a different country, the law of that other country will apply pursuant to art 4(3). Such a closer connection may arise from the contract contemplated by the negotiating parties.

A choice of the law applicable to liability arising from culpa in contrahendo may be made, according to art 14(1) Rome II Regulation, by an agreement entered into after the event giving p. 497rise to the damage occurred or, where all the parties are pursuing a commercial activity, by an agreement freely negotiated before the event giving rise to the damage occurred.

3. Deviations from the applicable law

Notwithstanding the above, effect may be given, according to art 16 Rome II Regulation, to →overriding mandatory provisions (règles d’application immédiate) of the forum that for example impose special duties of disclosure in securities transactions, non-performance of which gives rise to pre-contractual liability, or that forbid certain types of conduct during negotiations, such as misleading advertising, to which pre-contractual liability also attaches.

On the other hand, the application of the rules of the competent law may be refused, on the basis of art 26 Rome II Regulation, if they lead to a result that is manifestly incompatible with the →public policy (ordre public) of the forum. This may occur in some legal systems if the applicable law denies any compensation for damage suffered by the plaintiff as a consequence of the defendant’s deliberate failure to disclose essential information that the former could not otherwise obtain, or in the case of a party’s arbitrary withdrawal from negotiations after the other party had been led to believe that a contract would be concluded. In fact, good faith, as well as the protection of legitimate reliance, is an essential principle of several civil law systems, and forms part of their public policy. The application of foreign rules that lead to results strikingly inconsistent with this principle may therefore be excluded, to the extent a relevant connection (Inlandsbeziehung) exists with the forum.

Article 12(1) Rome II Regulation does not allow courts to displace the putative lex contractus when a party that has broken off negotiations has reasonably relied upon its own law. De lege ferenda such an escape clause might, however, be appropriate in order to avoid the application to culpa in contrahendo of a law devoid of any substantive connection with the parties’ pre-contractual dealings.

Literature

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  • Rudolf Nirk, ‘Rechtsvergleichendes zur Haftung für culpa in contrahendo’ (1953) 17 RabelsZ 310;

  • Dário Moura Vicente, Da responsabilidade pré-contratual em Direito Internacional Privado (Almedina 2001);

  • Dário Moura Vicente, ‘Precontractual Liability in Private International Law: A Portuguese Perspective’ (2003) 67 RabelsZ 699;

  • Dário Moura Vicente, ‘La formación de los contratos internacionales’ (2005) 57 REDI 239;p. 498

  • Bart Volders, ‘Culpa in contrahendo in the Conflict of Laws: A Commentary on Article 12 of the Rome II Regulation’ (2007) 9 YbPIL 127.