France

98 pr econtractual liability in european private law

a French judge is likely to award damages for the loss of opportunity to buy the house.12 The amount of damages awarded will depend on the estimated chance of the sale being concluded had the fault not been committed. Dommage moral may also be admitted here, but since the assessment of damages is global, the question is not of practical interest.

B may also claim the enforcement of the contract. Because the contract of sale is, under French law, consensual,13 the sale contract can be formed before the contract is officially signed. The sale of someone else’s property is not valid14 but A is not trying to sell someone else’s land. He is partly the owner of the land. In such cases courts have decided that the contract is valid as between the seller and buyer but of no effect15 against co-owners16 (in our case, A’s sisters). The solution to this contradiction lies in the termination of the joint ownership. A and his sisters are not obliged to remain joint owners.17 If he agrees on this point with his sisters, A can have the entire property rights in the land. Being then the sole owner, he is bound by the contract made with B, although no signature has been given; the contract is then fully valid18 and can be officially signed. In case of conflict B can ask the judge to recognise that the contract is fully valid and have this judicial decision recorded in the land registry. He will then have proof of ownership that is binding on third parties.19 If A’s sisters (or, in case of conflict, the judge) are not willing to give the land to A, the contract between A and B can have no effect.20 It is retroactively considered as null.21 A is then liable in tort as set out above.

12See the French report on case 1.

13See case 11. The analysis here assumes that neither party raises an argument about the lack of evidence to prove the contract.

14C.civ., art. 1599.

15French writers and courts refer to a theory of ‘opposabilite´’. On this theory see Ghestin, Billiau and Jamin, Les effets du contrat, p. 417ff.; J. Duclos, L’opposabilite´, essai d’une the´orie ge´ne´rale.

16Civ 1, 9 May 1978, JCP 1979, II, 19257, note Dagot; Civ 1, 15 June 1994, RTDCiv 1995, 411, obs Patarin.

17See C.civ., art. 815.

18Bergel, Bruschi and Cimamonti, Les biens, no. 491; M. Donnier, J-Cl-Civil, art. 815 to 815–18, fasc. 30, 1992, no. 76ff.

19Under the theory of opposabilite´ mentioned above n. 15.

20See, e.g., Civ 1, 12 Apr. 1976, Bull Civ I, no. 122.

21Bergel, Bruschi and Cimamonti, Les biens, no. 491; M. Donnier, J-Cl-Civil, art. 815 to 815–18, fasc. 30, 1992, no. 76ff.

Germany

A is not liable. He has no liability on the ground of §§280(1), 311(2) No. 1 BGB (culpa in contrahendo). In the first place, his termination of the negotiations is supported by a good reason. Secondly, the projected contract requires a specific form. According to §311b(1) sent. 1 BGB a contract whereby one party binds himself to transfer a piece of land requires notarial authentication. A legal transaction which is not in the form prescribed by law is void.22 In the case of a proposed sale of an interest in real property, therefore, a party breaking off negotiations may be held liable in reliance damages on the ground of culpa in contrahendo only in very exceptional circumstances. Otherwise the policy behind the formal requirement, which is meant to protect the parties from hasty and inconsiderate decisions in a matter where a valuable object is at stake, would be frustrated. The party breaking off negotiations would indirectly be put under pressure to enter into the contract if he or she had to compensate the other party’s reliance interest. For this reason it is standard practice23 of the Bundesgerichtshof that an action based on culpa in contrahendo only lies if the conduct of the party ultimately refusing to sign the notarial instrument was particularly repugnant so that the result would be ‘absolutely unbearable’. The court’s reasoning rests upon ‘abuse of the law’. In a recent judgment it was made clear that in the case of a contract subject to formal requirements, the conduct of the party breaking off negotiations amounts to abuse of law only if he has deliberately failed in his duty to bargain in good faith.24 A, however, did not make B believe by design that the proposed contract would be concluded in due form.

A is not liable in tort, either, since he did not wilfully cause damage to B.25

Greece

The general obligation under articles 197 and 198 GCC to negotiate in good faith imposes a number of particular obligations on the parties, such as obligations to conduct negotiations in earnest, to protect the

22§125 BGB and see case 11.

23BGH, decision of 16 Feb. 1954, NJW 1954, 1241; BGH, decision of 3 Dec. 1958, NJW 1959, 626; BGH, decision of 27 Oct. 1967, NJW 1968, 39; BGH, decision of 12 June 1975, NJW 1975, 1774; BGH, decision of 7 Feb. 1980, NJW 1980, 1683; BGH, decision of 19 Nov. 1982, NJW 1983, 563; BGH, decision of 29 Mar. 1996, NJW 1996, 1884.

24BGH, decision of 29 Mar. 1996, NJW 1996, 1884. 25 §826 BGB.

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interests of the other party and to provide the other party with the necessary information.26 It is a basic assumption that a party (the seller) negotiating the sale of an object actually owns this object, unless otherwise agreed upon by the parties. A seller who is negotiating the sale of an object which he does not own, if he does not inform the prospective buyer of this fact, is liable to the prospective buyer for negotiations in bad faith.27 B justifiably assumes that the land under negotiation belongs to A and the latter is negligent in believing that he is the sole owner. A’s behaviour is at fault and, on the basis of the above provisions, gives rise to a claim for compensation due to precontractual liability.28

Proprietary rights in immovable property are registered in public records which are accessible to all those who may be interested. On account of this, the question may arise whether the buyer is guilty of contributory negligence29 in not verifying the property status of the land by checking the public registries. The case law on precontractual liability answers this question in the negative; the buyer is not negligent in failing to verify the property status of the land of his own volition. In other words, the negotiating party is not contributorily negligent in not checking the reliability of the statements made by the other party when one would expect that it is reasonable to rely on them.30

26Areios Pagos has determined the obligation of the negotiating parties to provide information as follows: ‘Each party is under a duty to communicate to the other party real facts which are significant for that party to form a decision and that party could not ascertain the information from elsewhere. In any case that obligation does not extend to issues which the negotiating party should and could have ascertained by personal diligent research’, AP 344/1982 NoV 1982, 1465–6. The seller must take the initiative to inform, and does not require specific questions by the buyer (Court of Appeals of Athens 11518/1986 EllD 1988, 916). For the obligation to inform see also Deligiannis, Legal Consultations 1960–1966, p. 72.

27Kambitsis, Precontractual Liability, p. 92.

28Court of Appeals of Athens 11518/1986 EllD 1988, 916 concerned a similar case: the seller, who had become owner of an immovable by inheritance, did not communicate to the prospective buyer in the stage of negotiations that the validity of the will, which transferred ownership to him, was disputed in court and he was therefore considered to be precontractually liable towards the buyer.

29Article 300 GCC.

30In one case the property to be sold was burdened with a mortgage and the court rejected the seller’s claim that the buyer’s fault in not checking the public registers before the purchase limited the former’s precontractual liability as it amounted to contributory negligence; the court held that the buyer could rely on the seller’s statements without being contributorily negligent, thus the seller was solely precontractually liable (Court of Appeals of Athens 2065/1971 Arm 1971, 1071). However, a later case of the Court of Appeal on facts similar to those here stated vaguely that liability under the provision of