of a number of issues around the formation of contract which might conceivably­ have promissory characterisations.

1.  Wasted pre-contractual expenditure following termination of contract negotiations

One of the most lively areas of debate surrounding formation of contract at the present time concerns whether a party negotiating a contract ought ever to incur liability for the negotiating expenses of the other party if negotiations for a contract are broken off. Such cases of failed contract can often result in the substantial costs of the negotiation process falling on one of the parties, particularly in cases where the negotiations are protracted or where one party has repeatedly requested the other to produce detailed information related to the intended contract. Where the money expended by one negotiating party has conferred some objective benefit on the other, then unjustified enrichment may provide a remedy; where this is not so however, and the expenditure is thus genuinely ‘wasted’, recovery is more problematic.

A strict dualist (or ‘light switch’)2 view of the contract formation process would assert that there are but two states: the negotiation state, where no voluntary duties can arise between the parties, and the contract state, only achieved when the parties’ wills have concurred in the formation of a contract, when duties will be assumed by each to the other (which duties rarely include any duties to pay for the other’s negotiating or preliminary costs). There being, on this view, no intermediate state, no liability can arise for wasted pre-contractual expenditure (unless it be as a result of some tortious act, such as misrepresentation): any party undertaking such expenditure is held to do so at its own risk.

An alternative and emerging view is that there are (or ought to be) some circumstances where, if no contract is concluded, one of the contracting parties should be held to have undertaken liability for the other’s wasted pre-contractual expenditure. Such circumstances must necessarily be limited, or else the allocation of risk between the parties will be fundamentally skewed against one of the parties and freedom not to contract will be threatened. Whether such liability should exist, if so how it should be delineated, and how conceptually it should be seen as arising, are questions with which all systems have to struggle. As the discussion which

2A characterisation given by the ‘relational contract’ theorist Ian Macneil, as recounted in Macaulay, ‘Relational Contracts Floating on a Sea of Custom?’, p. 778.