According to the theory of culpa in contrahendo, from the moment that negotiating parties enter into contractual negotiations, a special relationship (Sonderrechtsverhältnis) arises between them by virtue of the law, which imposes on both parties duties of protection and loyalty (Schutzpflichten). The culpable violation of these duties may give rise to liability for culpa in contrahendo which is governed by the rules of contractual liability (§ § 276ff BGB). In the current German legal scholarship, the notion of precontractual liability imposed by law is rationalised as a reliance-based ‘relationship of obligation’ imposed by law (gesetzliches Schuldverhältnis). The reliance basis of the doctrine of precontractual liability has also been recognised by the courts. For instance, the Bundesgerichtshof has stated that this doctrine is ultimately based upon ‘reliance that does not materialize’ (enttäuschtes Vertrauen). The idea underlying the judgments that refer to culpa in contrahendoliability, in its different groups of cases, is that of a general duty to answer for the disappointed trust (enttäuschtes Vertrauen) of others in the valid conclusion of a contract. Indeed, in cases of liability for breaking off negotiations there is an expectation as to the future conclusion of a contract that has been disappointed. Some authors have gone as far as to conceive culpa in contrahendo as a possible ground of ‘reliance liability’ (Vertrauenshaftung) which would be a ‘third way’ (dritte Spur) between contract and delict.

Although the principles of culpa in contrahendo were codified in 2001 (‘the 2001 reform’) and, consequently, precontractual liability now has a statutory basis in German law (§ § 241(2), 280(1), 311(2)(3) BGB), these paragraphs must be interpreted in relation to the case law which preceded the 2001 reform as, with the codification of these provisions, the legislator intended neither to change the rules of cic that had been previously developed by the courts nor to impede their further development by future case law. These paragraphs state:

Following on from the findings of the previous chapter, it is necessary to analyse the impact that the reliance approach could have in English law's treatment of liability for breaking off negotiations, particularly in the paradigm case. The chapter will first analyse the current position of English law regarding the treatment and solutions it provides for situations that in the selected jurisdictions would be considered as falling under the label of ‘precontractual liability’. The focus is on whether its piecemeal solutions protect the paradigm case (section I). The chapter will then look at the notion of good faith in the common law world, particularly at English law's rejection of good faith during negotiations. It will argue that from this rejection it does not necessarily follow that the notion of precontractual liability should be also rejected (section II). The chapter will finally argue that the notion of reliance is already present in the piecemeal solutions currently available in English law, and that if the obstacle of good faith were to be removed and the emphasis shifted to the notion of reliance, the idea of liability for breaking off negotiations might face less opposition, exploring how such a liability in the paradigm case could be implemented (section III).

THE CURRENT POSITION OF ENGLISH LAW

Even though English law does not recognise precontractual liability as a general principle of liability, it provides relief in certain factual situations that in the selected jurisdictions would fall under the general principle of precontractual liability. These ‘particular reason[s] for imposing liability’ can be referred to as ‘piecemeal solutions’ that allow for the recovery of losses incurred or benefits unjustly received during the precontractual phase. However, it must be considered whether English law can achieve the same or similar results as the selected jurisdictions, albeit through different techniques and using a different language, in cases of precontractual liability. It will be argued that in many cases it can but that in the paradigm case, 5 English law, as it currently stands, does not provide a remedy.

We are delighted to introduce this book, which has been developed from the very successful doctoral thesis which Professor Zuloaga defended at the University of Oxford in 2017. We first saw her work as a Master's student when she took our course on comparative contract law in the MJur at Oxford, and later we shared the supervision of her research for her DPhil thesis.

Professor Zuloaga has put her own stamp on the topic of precontractual liability. Indeed, before she came to Oxford, her interest had already been sparked during the studies for her law degree at the Universidad Adolfo Ibáñez in Santiago, Chile, where she wrote a dissertation on this general area, published as Teoría de la Responsabilidad Precontractual: Aplicaciones en la Formación del Consentimiento de los Contratos (Santiago, Legal Publishing Chile, 2008). Her work for the doctoral thesis – presented now in this book – takes her research to a broader and significantly deeper level. It offers an English-speaking audience a Latin American perspective on the topic, introducing readers to the Chilean approach to precontractual liability, as well as the more well-known approaches taken in the continental European civil law systems such as German and French law. But it also addresses head-on the difficulties which arise from comparing the approaches taken by civil law systems and common law systems to precontractual liability for breaking off negotiations.

Professor Zuloaga's theme is ‘reliance’ in the process of negotiations; ‘reliance’ is a term that has to be examined carefully, and Professor Zuloaga finds in it two distinct but related dimensions, ‘trust-based’ reliance and ‘expectationbased’ reliance. Her argument is that the other party's ‘reliance’ can justify the imposition of liability on the party who breaks off negotiations – but that such notions of reliance already underlie the approaches to precontractual liability taken by the civil law systems which she selects for detailed study, i.e., her ‘selected jurisdictions’ (Germany, France and Chile).

Following on from the study of reliance in the breaking-off of negotiations in each selected jurisdiction, this chapter brings together the findings of the three previous chapters and argues that reliance is the core notion of precontractual liability for breaking off negotiations. The chapter will first make a comparative analysis of the general characteristics of this liability in the selected jurisdictions (section I). Particular attention will be paid to the much-debated issue of the nature of this liability, that it is a fault-based liability, and the presence of other requirements shared by the selected jurisdictions. The chapter will then focus on the comparative analysis of the two more prominent bases of liability for breaking off negotiations in the selected jurisdictions: reliance and good faith. It will first examine, from a comparative perspective, the reliance basis, looking at its meaning, manifestations, genesis and justification, and showing that it is the core element that explains the imposition of this liability (section II). It will then address the role of good faith in the breaking-off of negotiations, focusing on 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 (section III). The chapter will conclude 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 (section IV).

GENERAL CHARACTERISTICS OF PRECONTRACTUAL LIABILITY FOR BREAKING OFF NEGOTIATIONS IN THE SELECTED JURISDICTIONS

From the previous chapters it is clear that the German doctrine of culpa in contrahendo and the French doctrine of precontractual liability have some marked differences. It has also been shown that in receiving these doctrines, Chilean law has taken some elements from each of these jurisdictions and has developed them in light of the particularities of its legal system. Nevertheless, and despite the diff erences, the selected jurisdictions have many commonalities and provide for a similar protection in the breaking-off of negotiations. Indeed, it has been stated that the new articles 1112 and following of the Code civil, structurally and conceptually, are not dissimilar to § § 241(2) and 311(2) BGB, which codified the doctrine of culpa in contrahendo. A summary of the general characteristics of this liability in the selected jurisdictions is presented below.

Before analysing the details of the treatment of liability for breaking off negotiations in the selected jurisdictions and in the contrasting jurisdiction, it is important to address generally the fundamental principles that underlie the doctrine of precontractual liability (reliance and freedom) and to highlight the presence of the notion of reliance since the conception of the doctrine.

RELIANCE

NOTION AND DIMENSIONS

This book does not deal with the theory of reliance which has been put forward as the foundation of the binding force of contracts, but it will show that the notion of reliance applied in the precontractual period has a similar content in that it refers to a trust that is placed on an expectation : not that a contract has been concluded, but that a contract will be concluded. The use of ‘reliance’ throughout the book is loose and non-technical, except where it is stated otherwise, in order to encompass these notions of trust and expectation, so that this one term (which can be translated as Vertrauen, croyance/confiance and confianza in the selected jurisdictions) includes all these notions.

The book argues that there are two dimensions of reliance in cases of broken negotiations, referring to them as ‘trust-based reliance’ and ‘expectationbased reliance’. The former seeks to highlight the element of trust which exists or should exist between negotiating parties and the latter focuses on a specific expectation in the future conclusion of the contract under negotiation (‘the negotiated contract’). Both dimensions, as well as their interaction, are identified in each selected jurisdiction and in the contrasting jurisdiction, and analysed in detail in the comparative chapter.

ON THE ORIGINS OF THE DOCTRINE OF PRECONTRACTUAL LIABILITY

A historical study of this doctrine in the selected jurisdictions is outside the scope of this book, which focuses on the current state of the law in each jurisdiction. Nevertheless, it is relevant to point out briefly that the notion of reliance has been present from the conception of the doctrine in Germany and France, and, in the case of Chile, to provide a succinct historical account of the reception of the doctrine, particularly in the case of breaking off negotiations.

After several projects to reform the French law of contract and obligations were prepared by academics and by the Ministry of Justice, Ordonnance no. 2016-131 of 10 February 2016 on the reform of the law of contract, the general regime of obligations and proof of obligations was published on 11 February 2016 in the Official Journal (‘the 2016 reform’). This substantial reform of the Code civil came into force on 1 October 2016 and is applicable to contracts entered into from that date onwards. Loi no. 2018-287 of 20 April 2018 ratified Ordonnance no. 2016-131 of 10 February 2016 but modified some of the articles of the Code civil introduced by the Ordonnance. Loi no. 2018-287 entered into force on 1 October 2018. The reform introduced significant modifications to the law of contract and obligations in general, but the most relevant for this book are the new general ‘Introductory Provisions’, amongst which new article 1104 expressly establishes that contracts must be negotiated in good faith, and the new chapter on ‘Formation of Contracts’, where new article 1112 expressly recognises liability for breaking off negotiations. The text of article 1112 as introduced by Ordonnance no. 2016-131 is the following:

The text of article 1112 as modified by article 3 of Loi no. 2018-287 is the following:

This book will show that the notion of reliance is the defining element of liability for breaking off negotiations in the selected jurisdictions, particularly in the paradigm case. In this way, the legitimate reliance of the claimant on the expectation of the future conclusion of the contract, induced or encouraged by the party who then breaks off, is the common factor that explains the rationale of this liability. Although the scope of this work is limited to these jurisdictions, other studies have found that this notion is used to explain precontractual liability in many other jurisdictions. Some legal scholars go as far as stating that the disappointment of reliance is the common element to all doctrines relating to precontractual liability.

This work will demonstrate that there is no functional equivalence between the selected jurisdictions, on the one hand, and the contrasting jurisdiction, on the other, regarding the paradigm case: the latter does not provide relief for it, while the former do. Following a combined common core and functional approach, this work will argue that reliance is the ‘higher concept’ or ‘common core’ of liability for broken negotiations in the selected jurisdictions, and will show that reliance is present in the particular liabilities where the contrasting jurisdiction provides relief in cases of broken negotiations. Thus, reliance has the potential of leading to a functional equivalence or a common core between the selected jurisdictions and the contrasting jurisdiction if the latter were to embrace a reliance approach to granting relief in the paradigm case.

Throughout this book, the concept of reliance is used in ‘a rather looser sense’ in order to encompass the defining notions of the two dimensions of reliance that will be identified: trust and expectation. The distinction between the two dimensions of reliance in the field of precontractual liability for broken negotiations is very relevant because it shows how reliance interacts with good faith and how the two can be separated. It is here, in particular, that this work aims to demonstrate an innovative theoretical analysis that could have important practical consequences.

The doctrine of precontractual liability entered into Chilean law and has become established via a process of mixed reception of ideas emanating from the French doctrine of responsabilité précontractuelle and the German doctrine of culpa in contrahendo. This chapter will focus on the current state of precontractual liability for breaking off negotiations in Chilean law. Throughout the chapter it will be highlighted where Chilean law comes closer to German or to French law, but it will begin by referring to certain aspects of the doctrine of precontractual liability where it is clear that la doctrina and la jurisprudencia have taken elements from the German or from the French tradition and have sometimes combined these elements into a Chilean hybrid (section I). The chapter will continue with the analysis of the different theoretical bases that have been used to justify the imposition of precontractual liability for breaking off negotiations (section II), arguing in favour of the notion of confianza, which corresponds to the German notion of V ertrauen and the French notion of croyance/confiance légitime (II 1). The role that the principle of good faith (II 2) and the doctrine of abuse of rights (II 3) have played in providing a foundation for this liability will also be explored. The chapter will then look at the requirements of precontractual liability for breaking off negotiations that have been outlined by la doctrina and la jurisprudencia (section III). It will continue with the analysis of the particular scenarios of broken negotiations for the conclusion of a formal contract and lack of formality cases, as these seem to be the types of cases most frequently disputed before the courts (section IV). The chapter will argue that reliance, embodied in the notion of confianza, is the core element of precontractual liability for breaking off negotiations in Chilean law.

AT THE CROSSROADS BETWEEN GERMAN AND FRENCH LAW

The doctrine of precontractual liability in Chilean law has continued to be mostly influenced by the developments of the doctrine in both German and French law. La doctrina and la jurisprudencia, when discussing precontractual liability for breaking off negotiations, frequently refer to legal scholars and judgments from these European jurisdictions.