Ireland

102 precontractual liability in european private law

particulars.37 The memorandum need not be a single document but can consist of a number of documents joined together to satisfy the four crucial elements,38 for example a cheque has been held to be sufficient written evidence as to the price, when combined with other documentation.39 Similarly, the definition of a signature has been given a broad interpretation by the courts.40 Initials, rubber stamps, even headed paper have been held to constitute a signature within the meaning of the Statute.41

If there is no memorandum sufficient to comply with the Statute of Frauds then the contract between A and B is unenforceable. Accordingly, B has no claim under the purported contract for expenses already incurred. Neither does B have any claim in tort, since A’s belief does not fall within the action for deceit.42

Italy

A’s conduct during negotiations seems to lead to precontractual liability under article 1338 of the Civil Code which concerns the negotiating party’s duty to communicate to the other party any grounds for the invalidity of the contract that he knows or ought to have known.

Current academic writing distinguishes article 1338 from article 1337, as applying in cases where the parties have concluded an invalid contract or entered into negotiations as a result of the deliberate or negligent failure of one party to provide information. In a recent decision, the Italian Supreme Court appears to have agreed with this, saying that ‘article 1338 differs from 1337 because it provides protection for the party’s reliance on the validity of contract, and not for reliance on contract conclusion. Recoverable damages will cover all consequences for having relied on the validity of the contract, and not on its conclusion.’43

The invalidity (invalidita`) of a contract has then been interpreted as any situation that prevents the contract from having any effect.44 Italian case law has mainly referred to article 1338 in cases concerning

37Law v. Roberts, above n. 34.

38Tradax (Ireland) v. Irish Grain Board [1984] IR 1.

39Doherty v. Gallagher (unreported, High Court), 1975.

40The key issue is that the signature attests to authenticity: McQuaid v. Lynam [1965] IR 564.

41Casey v. Intercontinental Bank [1979] IR 340. 42 See the Irish report on case 1.

43Cass 26 May 1992, n. 6294.

44Sacco and De Nova, Il contratto, I, 592; F. Benatti, ‘Culpa in contrahendo’, CI, 187, 293.

the public administration in order to clarify its duty of information:45 despite the important role played in the evolution of precontractual liability,46 few decisions have expressly cited this article.47

Moreover, there have been questions about what is meant by saying that a party ‘ought to have known’ about grounds of invalidity. The solution seems to rely on the duty of reasonable diligence under the Codice Civile. Article 1338 certainly has to be read in the light of articles 1578, paragraph 2, and 1821, paragraph 1, about the duty to inform and knowledge of circumstances.48

Italian academic writers and case law are divided over the interpretation of article 1338. The Italian Supreme Court generally excludes precontractual liability when the grounds of invalidity consist in a breach of imperative laws.49 Italian case law usually cites the principle nemo tenetur ignorare legem as a case of negligence of the negotiating parties. Mistake of law (errore di diritto) is set against the duty of diligence provided by article 1338. Both parties are then seen to be equally negligent, and in consequence this has often been held to exclude parties’ justified reliance on the conclusion of the contract.50

On the other hand, the prevalent view of writers51 and some dissenting case law52 consider that mistake of law, as mistake of fact, can be excusable. The increasing complexity of written law and the absence of any specific distinction in the Codice Civile does indeed support a more flexible position, which would lead to a duty on one party to inform the other party that has relied without fault (senza sua colpa) on the validity of the contract.53 Real importance can then be given to the evaluation of the actual degree of care shown by the party suffering the loss in relation to the nature of the law of which he was ignorant.

According to this interpretation of article 1338, in the present case A’s ignorance (and consequently his silence about the grounds that would have made the contract void) does not seem to correspond to the

45TRIB-T. Torino, 30 Oct. 1990; App. Torino, 9 Dec. 1992.

46Musy, Il dovere d’informazione; S. Rodota`, ‘Il tempo delle clausole generali’ RCDP 1987, 709.

47Cass 26 May 1992, n. 6294; TRIB-T. Roma, 14 May 1980; Cass 17 Nov. 1978 in GC 1979, I, 33; TRIB-T. Verona, 31 May 1980.

48F. Benatti, ‘Culpa in contrahendo’, CI, 187. 49 Cass, S.U., 4 Oct. 1974, n. 2603.

50Cass, sez. I, 6 Mar. 1998; Cass, sez. III, 26 June 1998, n. 6337.

51Sacco, Il contratto, p. 924; Visintini, La reticenza nella formazione dei contratti, p. 272; Benatti, La responsabilita` precontrattuale, p. 304.

52TRIB-T. Roma, 14 May 1980; TRIB-T. Pescara, 4 Mar. 1978.

53Sconamiglio, Dei contratti in generale, p. 223.

104 precontractual liability in european private law

minimal degree of care required in a sale of land.54 Since it appears that the land belongs at the same time to A and his sisters because of inheritance, A is liable for negligence, having been ignorant of the law. Italian hereditary succession law55 generally follows the principle that the heir must expressly accept the deceased’s estate,56 a rule which applies also when law directly attributes (by intestate succession) part of the estate to an heir.57 A seems not to have any defence against the rule ignorantia legis not excusat.

As in any case of precontractual liability B is entitled to ask in theory for damages corresponding to the interesse negativo. But in this case the amount could be reduced considering B’s negligence in relation to the ignorantia legis.

Netherlands

Under Dutch law A is probably liable to compensate the expenses incurred by B in the negotiations (estate agents’ fees, travel tickets to visit the land) and for having had an architect make drawings for the house. Since Plas/Valburg, the Hoge Raad has held that even before the ‘third stage’ in negotiations is reached a party may be liable to compensate expenses (‘second stage’).58 It is very likely that in this case A will be liable (on the basis of tort or precontractual good faith) to compensate B’s expenses in the negotiations, especially since in all likelihood a Dutch court would hold that the ‘third stage’ in negotiations was reached: the day before the parties are supposed to formally sign the contract A withdraws from the deal. At that moment B was justified in expecting that a contract would actually be concluded on 2 December. For that reason, B may even be able to recover the lost profit, if there was any (for example, if the agreed price was below the market price), as part of the expectation interest. Whether the cost of having an architect make drawings for a house to be built on the land is recoverable depends on whether this loss can be said to have been caused by A’s reprehensible conduct. Dutch law contains a very open and normative causation test: the question is

54 Cass, sez. II, 25 Nov. 1997, n. 11811. 55 Libro II c.c.

56See arts. 459, 490, 512, 649 c.c. For case law see in particular Cass, sez. II, 23 Aug. 1999, n. 8832; Cass, sez. II, 4 May 1999, n. 4414; App. Roma, 14 Jan. 1999; Cass, sez. II, 7 Feb. 1998, n. 1301; TRIB-T.Napoli, 4 Apr. 1996.

57See art. 586 c.c. and art. 42 Cost.

58On the question whether the ‘second stage’ still exists, after the recent CBB/JPO case, see the Dutch report on case 1.