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no unjust enrichment (although C might possibly obtain a reduction in the price, given A’s behaviour contrary to good faith).65

Sweden

A has not given a notice of termination in accordance with the legal requirements and therefore the rental agreement is automatically prolonged.66

If the rental agreement was concluded in writing and B has taken possession of the premises, B’s right under the contract will be valid against C even if B’s right is not reserved in the agreement between A and C.67 Even if the rental agreement did not fulfil these requirements, A has an obligation to B to make a reservation for B’s right in the agreement with C.68 If A does not fulfil this duty and the rental agreement therefore is not binding against C, B is entitled to damages for all losses due to A’s breach. The sole purpose of these rules is to protect the lessee. B’s right to damages and the amount of damages are therefore not dependent upon whether or not he insisted on the existing statutory protection.

As the parties have a contract for lease of non-residential premises for three years, that is, for a specified period, and the contractually agreed time exceeds nine months, a notice of cancellation has to be given nine months before the expiry of the contract. If such a notice is not given, the agreement is automatically prolonged for an indefinite and undetermined time.69 To be valid as such, the notice of cancellation, inter alia, has to be in writing and state the reason why the agreement is not prolonged.70 Such cancellations are used also when the only purpose is to renegotiate the rent.

As A has not given B a valid notice of cancellation in due time, the agreement is prolonged to last for an indefinite and undetermined time. If the rental agreement is binding also between B and C, C has to give a notice of cancellation to B. If C does not have a valid ground for not prolonging the agreement,71 B is entitled to damages amounting to one year’s rent.72 He is also entitled to compensation for other losses

65Articles 1101, 1258 CC.

66Doctrine: Grauers, Fastighetsko¨p; Grauers, Nyttjandera¨tt; Holmqvist, Hyreslagen. En kommentar; J. Ramberg, ‘Pre-contractual Liability according to Swedish Law’ in Hondius, Precontractual Liability.

67Jordabalken av den 17 Dec. 1970, Real Estate Code (JB), Ch. 7 §13. 68 Ch. 7 §11 JB.

69 Ch. 12 §§3 and 4 JB. 70 Ch. 12 §§8 and 58 JB. 71 Cf. Ch. 12 §57 JB. 72 Ch. 12 §58b JB.

resulting from the breach. However, he is not entitled to any claim in restitution to recover the profits A has made from the breach.

Had A given B a valid notice of cancellation within the stipulated time, the agreement would have expired before 1 January 2000. If A had a valid ground for not prolonging the agreement,73 A is not liable to compensate B. Otherwise, B is entitled to damages.74 The only rule that could be applicable in this case is that the lessor ‘has a good reason for not continuing the lease’. However, a sale to another party does not in itself constitute such a ‘good reason’, nor that the buyer’s purpose in buying is that he wishes to lease the premises to another party.

Switzerland

A is liable on the ground of culpa in contrahendo. He started negotiations with B in July 1999 without serious intention to conclude a contract with B but with the main purpose of inducing C to reconsider his bargaining position. There might have been some chance of a contract with B because it was not certain that C would buy the warehouse at a reasonable price. But A should have disclosed his essential reservation. A is to blame for wrong information. Therefore A has breached his duty to negotiate in good faith.75

There is no liability in tort alongside the liability for culpa in contrahendo (except for a party with the intention to cause harm).76 According to the minority opinion of academic writers, culpa in contrahendo is liability in tort.77 For the prevailing opinion, behaviour constituting culpa in contrahendo might automatically also be tortious behaviour,78 but the tort liability has no importance.

A must compensate B in the measure of his negative interest, by putting B into the position he would have been in if he had never relied on A’s serious intention to conclude a contract. The standard of comparison is a warehouse B would have rented between July and the end of 1999. The loss consists of the higher rent and of other loss because of increased difficulties in his distribution arrangements.

73 Cf. Ch. 12 §57 JB. 74 Ch. 12 §§57 and 58b JB.

75 BernerKommentar-Kramer, OR 22 n. 12, 14ff. 76 OR 41 II.

77See general discussion in the Swiss report on case 1.

78The duties of protection and loyalty might be understood as special norms for the protection of the other party (Schutznormen). Thus, their violation gives rise to liability on the ground of culpa in contrahendo and liability in tort. Compare Loser,

Vertrauenshaftung im Schweizerischen Schuldrecht, n. 1101; BGE, 26 Sep. 2001 no. 4C.193/ 2000 E.4a.

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Given the uncertainties, the judge may assess the damages according to OR 42 II.79

The rent of A’s warehouse is not the standard of comparison. This would be compensation of the expectation interest, and B had no right to the renewal of the contract. Nor is the rent of X’s warehouse the standard of comparison. At that time A was not in breach of his duties, and so there is no causal link.

Editors’ comparative observations

With the possible exception of Ireland, all jurisdictions provide B with a remedy, although the legal basis of the remedy varies.

Protection for tenants: the particular context (the contract of lease) is significant in a number of jurisdictions in which the business tenant is protected by statute against the wrongful termination of the lease. In all four jurisdictions which adopt this approach on the facts of this case (England, France, Scotland and Sweden), there appears to be an underlying policy that the tenant should be entitled to a new lease (or a continuation of the old lease) unless the landlord has good reason to refuse it. This protects the business tenant who may have built up goodwill associated with the premises and who may suffer loss of custom and other losses or costs if he is required to move at the end of the contractual term, when there is no good reason for the landlord to require him to vacate the premises. The reasons which those jurisdictions regard as sufficient will vary (and may include, for example, the tenant’s misconduct or the landlord’s overriding need for the premises) but in none of these jurisdictions would A as landlord have a sufficient reason on the facts given: the sale of premises at a higher value to a third party is not a good reason. However, the strength of this rule varies between jurisdictions: in France, for example, the lease continues even where B has left the premises unless he has consciously renounced the statutory protection – and then he has no right to any compensatory damages. But in England, once B has delivered up the premises it is too late to insist on a new lease and he is left to his general claim to damages (described below).

79OR 42 II: ‘If the exact amount of damages cannot be established, the judge shall assess them in his discretion, having regard to the ordinary course of events and the measures taken by the damaged party.’

Damages: all jurisdictions which give B a claim in damages against A take a broadly similar approach to the scope of recoverable damages. Although A has made a profit from his negotiations with B in having secured a better price in the sale to C, all jurisdictions (with the possible exception of the Netherlands, which is uncertain on this issue) reject B’s claim to recover A’s enrichment. The facts give rise only to claims for B’s losses, and so generally there is no remedial disincentive to A’s (mis)conduct in such a case beyond his liability to compensate B (although in English law exemplary (punative) damages might sometimes be available to deal with such a case).

The losses suffered by B on the facts given (his additional costs associated with renting a temporary warehouse at short notice and the business losses which might flow from this disturbance to his distribution arrangements) are all within the ‘reliance’ or ‘negative’ interest. Most jurisdictions would, in any event, limit the recoverable loss to the ‘reliance’ interest: an exception is the Netherlands, where expectation damages can be recovered either if there is held to be a concluded contract between A and B to grant the new lease, or if (without there yet being a concluded contract) the negotiations are held to have reached a sufficiently late stage when they are broken off (the third of the ‘three stages’ of negotiations).

The claim to ‘reliance’ damages is either based on the general principle of precontractual liability (culpa in contrahendo) or in tort. Jurisdictions characterise A’s wrongdoing – the ‘trigger’ for his liability – in different ways, and this impacts upon the basis on which they award damages here. England and Scotland, not having a general principle of precontractual liability, have to find a specific wrong, and do so in A’s false statement about his intention to conclude a contract (the tort of deceit). So would Ireland, but the Irish reporter doubts whether there is a fraudulent misrepresentation on the facts. And Germany will find (in addition to culpa in contrahendo) liability in tort arising from A’s intention to cause economic loss to B; the Austrian reporter also contemplates a claim in tort, but prefers culpa in contrahendo. Jurisdictions which recognise a general principle of precontractual liability (either autonomous or within the law of tort)80 find the trigger for A’s liability in different facts: some focus on the fact that A created a misleading impression from the beginning about his seriousness in conducting the

80For the different approaches of the several jurisdictions to this issue, see the Editors’ comparative observations on case 1.

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negotiations (Austria, Finland, Germany, Greece, the Netherlands, Norway, Portugal, Switzerland) and/or conducted the negotiations with B in bad faith by failing to inform B about the parallel negotiations with C (Denmark, Italy), although reporters differ as to how firmly they separate these stages of the negotiations on these facts. Some, however, hold that it is A’s breaking-off the negotiations at an advanced stage that gives rise to his precontractual liability (Italy, the Netherlands, Spain). Some jurisdictions find more than one basis (and more than one ‘trigger’) for A’s liability: the most notable case is the Netherlands, which might find liability here in contract, tort, precontractual liability and restitution, in each case focusing on different aspects of A’s conduct to identify the relevant ‘trigger’ for liability.

There are, however, some disagreements about the precise scope of damages recoverable within the ‘reliance’ interest here: in particular, some jurisdictions (in particular, Norway) would use the earlier loss of an alternative contract with X to quantify B’s loss, although others (such as Germany, Greece and Switzerland) appear to take a stronger approach to causation and exclude the contract with X on the basis that, predating the negotiations between A and B, it cannot be linked causally to the later breakdown of those negotiations. Many reporters note that B’s removal costs would not be recoverable, since they would have been incurred anyway (no causal link), and Finland and Norway consider the possibility of reducing B’s damages by reference to his own fault in not taking steps to find alternative accommodation.

Amongst those jurisdictions that protect the tenant against wrongful termination within the rules particular to leases, England and Scotland solve this case by awarding damages in the law of tort, since the lease rules do not apply here (and, in any event, B could choose to claim damages in tort rather than the renewed lease if he so preferred). But France and Sweden solve the case exclusively by an application of the lease rules, so nothing can be learnt from this case about their approach to damages (in tort, or for precontractual liability/culpa in contrahendo) on such a set of facts.81

81In the original version of the questionnaire, cases 1 and 2 were reversed. But since some jurisdictions did not answer this case on the basis of precontracual liability at all, we decided to reverse the order for presentation in the published volume so that the reader can obtain a better general picture of the reporters’ views about precontractual liability in reading what is now case 1 first. In reality, taking all the jurisdictions together, it is necessary to read the reporters’ answers to both case 1 and case 2 to see the broad picture.