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Placing the liability: contract, tort or tertium quid?

A further complexity in imposing liability in the precontractual phase is to determine the form of liability. The contract is not yet concluded, and so it is not obvious that the regime for precontractual liability should be the contractual regime. On the other hand, the relationship between negotiating parties is in some sense a legal relationship; at least, that is the underlying rationale of some systems in imposing precontractual liability. And so if the law of tort is perceived as being aimed at the protection against loss inflicted outside the context of a pre-existing legal relationship, then the precontractual phase does not quite fit the model of tort either. So should it be regarded as somewhere in between the two – a tertium quid?

The obvious first question to ask is why this matters at all. Indeed, some systems do not appear to think that the borderline between contract and tort matters much: the most straightforward version of this position is seen in the Danish report on case 1:

Danish courts would probably classify B’s behaviour as a tort but do not attach great importance to the distinction between tort and contract. On the whole, Danish courts tend to be moderate in awarding damages. A court might award damages but probably less than E0.2m and certainly not E0.5m.

The context of this statement makes clear why the contract/tort borderline does not really matter in Danish law, but why it may indeed have crucial significance elsewhere: there is no formal demarcation in Danish law in the law of damages between contract and tort.17 In some other systems, however, a distinction is drawn between the nature of contact and tort, which is reflected in a scientific analysis of the difference between the calculation of damages for breach of contract and

for tort.18

But the quantification of damages is not the only difference between contract and tort; and, indeed, different systems have developed different distinctions between their regimes of contract and tort, which

17Cf. the Danish report on case 4: ‘the court awarded the contractor compensation . . . Whether the compensation was awarded on a contract, tort or quantum meruit basis is difficult to say’.

18See, e.g., the Finnish, German and Swiss reports on case 1, distinguishing between ‘expectation’ or ‘positive interest’ damages (contract) and ‘reliance’ or ‘negative interest’ damages (tort). The Dutch Code, however, provides a single regime for all types of liability: Dutch report on case 1.

458 precontractual liability in european private law

will therefore have varying significance when they are brought into the context of how to place precontractual liability in relation to the contract/tort borderline. This is made clear by the Austrian reporter, who identifies a number of features of the contractual regime which make it more attractive to a claimant than the tort regime:19 in contract, vicarious liability (for example, for employees) is more generally available; the claimant has a more favourable burden of proof of fault; and there is a wider scope of liability (and in particular of economic loss). Similar accounts of the differences between the contractual and tortious regimes are given by the reporters for other jurisdictions, such as Finland20 and Switzerland,21 by way of context for their explanation of their systems’ approaches to precontractual liability.

The policy issues which lie behind these distinctions between the regimes of contract and tort have led some of the jurisdictions to devise particular approaches to the placing of precontractual liability. Some legal systems have a rigid division between contract and tort which has not been developed to admit a middle ground; and this usually leads to the decision that, since precontractual liability does not arise under a contract, it must be tort. The rules of tort must therefore be applied, either without any significant amendment (as in French22 or Spanish23 law) or as a special regime within tort law (as in Finnish law).24

Other systems, however, have held that the special nature of the precontractual phase merits special treatment: a tertium quid, between contract and tort. This can be traced back to the thinking of German law in its development of the doctrine of culpa in contrahendo, which is placed within the contractual liability regime.25 But the detail of such a doctrine, as it has been developed within other systems, has varied, and the Swiss reporter makes clear that the policy reasons for differentiating between the contractual and tortious regimes are assessed

19Austrian report on case 1, esp. n. 3.

20Finnish report on case 1: recovery of pure economic losses and the burden of proof of fault.

21Swiss report on case 1: vicarious liability, burden of proof and limitation periods.

22E.g. French report on case 1, esp. n. 22, showing that French academic writers have debated whether to place precontractual liability within contract or tort, but the settled view is that it must be tortious.

23Spanish report on case 1.

24See Finnish report on case 1: the doctrine of culpa in contrahendo derives from German contract law, but is applied in Finland as part of tort law.

25German report on case 1.

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independently for their application to culpa in contrahendo for the precontractual liability regime:26

In accordance with an emerging opinion in academic writing the Swiss Federal Court holds that culpa in contrahendo is neither contractual nor tortious but a liability by virtue of law, a liability sui generis with its own rules. For each modality of the liability there has to be a pragmatic decision whether contractual rules or tortious rules should apply by analogy in order to find an appropriate solution. In the field of vicarious liability and of the proof of fault the contractual rules apply in favour of the victim. By contrast the Federal Court applies the short period of prescription of one year (which is criticized by the prevailing opinion of academic writers).

Moreover, even in jurisdictions where the legislature has identified precontractual liability as an independent source of liability, there can still be room for discussion about whether it should follow certain particular rules within the contractual regime or the tortious regime. In particular, in relation to the Greek Civil Code which makes specific provision in articles 197 and 198 regarding precontractual liability:27

The specific nature of precontractual liability in Greece is disputed. The prevalent approach considers precontractual liability to form a separate, third type of liability, alongside the other two types, namely contractual and delictual. Thus, under Greek law precontractual liability is considered to be a sui generis type of liability and this is supported by the autonomous regulation of precontractual liability in the GCC. Nevertheless, among those who acknowledge precontractual liability as a separate type of liability there are still divergences: some emphasize the contractual affinity of precontractual liability (quasi-contractual), others stress the delictual nuances (quasi-delictual), whereas still others stand indecisively somewhere in between.

One should not, however, assume that a legal system which has developed a special regime for precontractual liability will necessarily regard it as exclusive; there can be an overlap with the regimes of contract and tort which might on occasion give the claimant a choice. For example, in a number of cases within this study reporters have identified alternative sources of liability on the same facts (most commonly, finding liabilities both on the basis of tort and for the system’s autonomous regime of precontractual liability).28

26 Swiss report on case 1. 27 Greek report on case 1 (footnotes omitted).

28See, e.g., the Austrian and German reports on case 1 (tort and culpa in contrahendo); and, for the most extreme example, the Dutch report on case 2 (contact, tort, precontractual liability and restitution).

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One context in which it will be important to identify the proper place for precontractual liability is in cross-border disputes: private international law. For issues which arise entirely within a single jurisdiction, whether the contractual or tortious liability regime (or a third, autonomous regime) is applied will be an internal matter of policy for that jurisdiction. But where the rules of private international law apply, it will be important to define the nature of the potential liability for the purposes of both jurisdiction and the choice of law rules to determine the substantive dispute. The European Court of Justice has held that for the purposes of the Brussels Convention29 (that is, to determine which court has jurisdiction) a claim for damages for breach of the precontractual duty to negotiate in good faith is a claim in tort within article 5(3) rather than a claim in contract within article 5(1).30 And the Rome I and Rome II Regulations30a make clear that, for the purposes of choice of law, obligations arising out of precontractual negotiations are covered by the Rome II Regulation (non-contractual obligations), rather than the Rome I Regulation (contractual obligations). Article 12(1) of the Rome II Regulation provides:

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 actully 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.

This is not necessarily the end of the matter, however, because it might be argued that for both jurisdiction and the substantive rules of liability, and the remedies to be awarded for breach of precontractual duties, it is not sufficient that the selection is limited to the established rules of private international law for either contract or tort, and that a tertium quid should be devised.31

29Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (OJ 1978 L304/36), as amended.

30C334/00 Fonderie Officine Meccaniche Tacconi SpA v. Heinrich Wagner Sinto Maschinenfabrik GmbH (HWS) [2002] ECR I-07357 (reference by the Corte suprema di cassazione in relation to a claim for damages under art. 1337 of the Italian Civil Code); note

G. Afferni in (2005) 1 European Review of Contract Law 96.

30a Regulation (EC) 593/2008 (Rome I), recital 10; Regulation (EC) 864/2007 (Rome I), recital 30 and arts. 2(1), 12(1).

31 C. Seraglini, ‘Le droit international prive´ et la pe´riode pre´contractuelle’ in O. Deshayes (ed.), L’avant-contrat: Actualite´ et processus de formation des contrats (2008), p. 77; B. Bourdelois, ‘Re´flexions sur le traitement des relations pre´contractuelles en droit international prive´’ in Me´langes Philippe Malaurie (Paris, 2005), p. 107.