264 precontractual liability in european private law

into negotiations with the Department of Education for the production of a children’s encyclopaedia in the Irish language. During these negotiations the plaintiff commenced preparatory work, with the full knowledge of the Department of Education. The Department subsequently decided not to proceed with the project. The plaintiff successfully sought compensation for the preparatory expenses. The court held that the plaintiff was entitled to an award of quantum meruit, even though the Department had not benefited from the work undertaken. It was sufficient that the work had been completed with the knowledge and approval of the Department.23

It is clear that the facts above fit into either of the above possibilities. B has undertaken work with A’s full knowledge and acquiescence. The result will be that A will have to compensate B for the reasonable value of the work undertaken through an action for quantum meruit.

Italy

As in case 8, the present case involves the withdrawal from a contractual proposal, as governed by article 1328 of the Civil Code.

Since the negotiations occurred between friends it would be very difficult for the parties to give evidence of their care in negotiation. On the one hand, A could be considered as precontractually liable because of his lack of care in starting the negotiations for the construction of the house despite his economic trouble. On the other hand, B’s conduct seems to point more to a case of his own negligence in beginning the construction than to a case of justifiable reliance on the conclusion of the contract. From the facts of the case the price seems to have been a fundamental element in order to decide whether to start the construction. In general,24 reliance is considered to be reasonable when the party has not acted with negligence. B does not seem to have complied with his duty of normal care in ascertaining whether A could afford the new house.

Both parties therefore seem to have been at fault. It is probable that a judge would decide on an equitable amount, if B’s justified reliance is proved. In any case B’s damages will be limited to the interesse negativo.

23See also Premier Dairies v. Jameson (Unreported, High Court), 1 March 1983.

24See for academic discussion Monateri, La responsabilita` contrattuale e precontrattuale,

p. 415; and for case law Cass 12 June 1959, n. 789; Cass 28 Jan. 1972, n. 199; Cass 22 Oct. 1982, n. 5492; Cass 29 Jan. 1985, n. 5920; TRIB-T. Milano, 3 Apr. 1967.

Netherlands

Contract: the safest approach for a court which wants to decide for the plaintiff and which wants him to be fully compensated is to accept the conclusion of a contract of some kind (for example, an agreement in principle). However, it is submitted that evidence to that effect is not overwhelming. At no point did the parties reach agreement on the essentialia, nor did A induce B to believe that they had reached agreement. In particular, the price remained under discussion throughout the negotiations. Therefore, it seems unlikely that A will be held liable under Dutch law for non-performance of a contract with B.

Breaking off negotiations: A may, however, be liable for breaking off the negotiations, for reasons similar to those discussed in relation to case 8.

Unjustified enrichment: one of the classic cases25 where the Hoge Raad explicitly rejected the adoption of a general action for unjustified enrichment was a case of performance of a contract which had not yet been concluded. In that case, Katwijkse haven, the city of Katwijk and a contractor had started negotiations on a contract for the removal of a large amount of clay and sand from land owned by that city. While the parties were still negotiating the contractor started the work, allegedly encouraged to do so by a civil servant (the city had an interest in having the job done as soon as possible) and under his supervision, but in any case to their knowledge. When the work was nearly completed the contract was given to a competing contractor. The first prospective contractor sought restitution of the unjustified benefit from the city on two grounds: onverschuldigde betaling (undue payment/repetitio indebiti) and ongerechtvaardigde verrijking (unjustified enrichment). Both claims were rejected, the former because the work done by the contractor could not be regarded as a payment; the latter because Dutch law at the time did not recognise a general unjustified enrichment action and the Hoge Raad in that case refused to adopt one, as it had done before in its decision Quint/Te Poel26 but unlike the draft for the new Dutch Civil Code which at that time had already been published. The Hoge Raad’s decisions in Quint/Te Poel and Katwijkse haven were severely criticised by academic writers. In his note on HR Katwijkse haven Scholten rightly argues that the city of Katwijk should either have stopped the contractor from starting the work or have warned the contractor that he

25HR 19 Apr. 1969, NJ 1969, note Scholten (Katwijkse haven).

26HR 30 Jan. 1959, NJ 1959, 548, note Veegens; AA VIII, 171, note Beekhuis (Quint/Te Poel).

more reason to apply a contractual point of view on an informal basis. If a contractual analysis is applied, a regular demand for payment can be made against A. B’s statement that he would ‘do it for a price which is lower than that charged by a commercial building firm’ has to be the guideline for determining the price for the work already carried out. He was aware of A’s financial problems and consequently the price should be set below the market value.

Unjust enrichment: whether one could base a claim for compensation on unjust enrichment in a case such as this is unclear, because no general theory with respect to unjust enrichment has been developed in Norwegian and Nordic law. The concept ‘unjust enrichment’ is more an indication of a problem than an established basis for a claim for compensation.28 Since B in the present case wittingly contributes an asset to A, one can hardly claim that this transfer of property is ‘unjust’. The presumption that B at least should receive compensatory damages for the work carried out is more readily dealt with from a contractual perspective (see above). If the claim is to be based on unjust enrichment, it is not clear how such unjust enrichment should be estimated in Norwegian law.

Precontractual liability: precontractual liability assumes that A has acted contrary to the general obligation of good faith during the contractual period. As stated in the Kina Hansen case,29 ‘blameworthy behaviour during contract negotiations must have been displayed – such as acting in bad faith, or in a dishonest or misleading manner’. The reason for A breaching the negotiations is that he ‘cannot afford even the (lower than) commercial rate’. His financial problems were admittedly conveyed to B prior to the commencement of the construction work. The question is whether A during the negotiation period had adequately informed B about his declining ability to meet the payment for the work. If, for instance, the break-off was caused by A’s failure to obtain external financing (such as a bank loan) for the building project, the question then is whether or not B was made aware of the risk of the loan application being turned down. Since the case concerns two friends, there is reason to demand fairly strict requirements as to the need for good faith. Precontractual liability would entitle B to receive reimbursement for expenses as he had trusted A’s good faith.

28In the case of mistaken payments, however, a particular doctrine has been developed as to when the claimant can request the restitution of the money; cf. condictio indebiti.

29Rt 1998, 761, 772.