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requirements for the harvesting machine and therefore when the machine fails to live up to those requirements, A is liable for breach of section 14. A’s failure to respond directly to B’s demand that the harvester harvest one acre a day is of no consequence since liability hinges upon A’s knowledge of the intended use, not on any statements made by A. A might also be liable for misrepresentation by silence in either contract, statute or tort. However, the remedy for the breach of section 14 is to be preferred to the more nebulous action of misrepresentation given the facts of this particular case.

Italy

This case concerns liability arising from misleading information obtained during the negotiations. Since a contract has been concluded, the case seems not (subject to what is said below) to give rise to precontractual liability under article 1337 c.c. (that is, extra-contractual liability), but can be considered a case of contractual liability where lack of information might give grounds for contractual remedies.

(1) Where the harvester’s capacity has been explicitly represented by A to B, we shall again turn to dolo (fraud). Article 1439 c.c. states:

Fraud is cause for the annulment of the contract when the deception employed by one of the contracting parties was such that, without it, the other contracting party would not have entered into the contact.

If the deception was not such as to compel consent, the contract is valid, even though without the deception it would have included different terms; however, the contracting party in bad faith is liable for damages. Italian academic writers77 place the violation of the duty to inform within the will theory and link it to article 1439 of the Civil Code.

77Very many Italian authors have written on this subject, and liability for nondisclosure is always considered along with the precontractual obligations of good faith. See Caruso, La culpa in contrahendo. L’esperienza statunitense e quella italiana; Grisi, L’obbligo precontrattuale di informazione; Nanni, La buona fede contrattuale, pp. 1–143;

F. Benatti, ‘Culpa in contrahendo’ CI 1987, 287ff.; Benatti, La responsabilita` precontrattuale; V. Cuffaro, ‘Responsabilita` precontrattuale’ in Enciclopedia del diritto, XXXIX (Milano, 1988), p. 1265ff.; M. Chiola, ‘Informazione’ in Enciclopedia giuridica Treccani; G. Ferrarini, ‘Investment banking, prospetti falsi e culpa in contrahendo’ Giur comm 1988, II, 585; A. Fusaro, ‘Fondamenti e limiti della responsabilita` precontrattuale’ GI 1984, I, 1, 1199; Loi and Tessitore, Buona fede e responsabilita` precontrattuale; V. Rasi, ‘La responsabilita` precontrattuale’ RDC 1974, 496; Visintini, La reticenza nella formazione dei contratti; M. Bessone, ‘Rapporto precontrattuale e doveri di correttezza’ RTDPC 1955, I, 360. So far there is no equally significant case law to match this huge range of academic writing.

The available remedies for B are contract resolution (recovery of the price and expenses; it might be possible to obtain the difference between the price and the cost of a replacement machine if the price has risen in the meantime) and, if A was in bad faith (he knew about the real capacity of the harvester), B can obtain damages for his lost crops related to the impossibility (which he must demonstrate) of providing a second harvester or a better harvester in due time.

Misleading information has also been recognised by Italian case law as a case of the tortious violation of patrimonial integrity giving rise to extra-contractual liability under article 2043 c.c.,78 but the contractual solution seems to be the most likely general approach.

(2) Where A makes no statement about the capacity of the harvester, it will be more difficult for B to recover damages.

Silence by itself does not constitute fraud,79 unless there was a fraudulent concealment of true facts or the silence violated an explicit duty to speak enforced by the law.80 Using the provisions of the Code on precontractual liability (article 1337 c.c.), B can try to argue that the duty to behave in good faith gives rise to an obligation on each party to inform the other when he discovers the other’s mistake. The same article 1337 can be considered as a basis for culpa aquiliana; Italian case law and legal theorists have considered that the violation of precontractual duties gives rise to private liability, as in the French solution.81 Article 1337 c.c. is thus considered a specific form of the neminem laedere principle used by article 2043 c.c. The Italian courts are open to create new forms of private liability as society evolves. It could be easier for a court to take an innovatory decision on the basis of the broad form of ‘unjustified injury’, than to create a new kind of fraud.

Some academic writers,82 according to the principles set out above, base liability for non-disclosure of relevant information (dolo omissivo)

78TRIB-T. Monza, 15 Feb. 1996.

79This statement could be found in a decision of the Trib. Verona, 18 Nov. 1946, in Foro Pad. 1947, 199 (the sale of a truck, without disclosing that it belonged to the state, was considered fraudulent and avoided).

80The Civil Code contains an explicit duty to disclose in arts. 1892–1893 concerning insurance contracts.

81Sacco, in Sacco and De Nova, Il contratto, I, p. 255; Cass 4 Oct. 1948, n. 1667, in GI 1949, I,1, 29; and nine other decisions up to Cass 11 May 1990, n. 4051, in FI 1991, I, 184; the opposite solution similar to the German tradition, where the precontractual liability is considered as a breach of a contract, has been followed in Italy by Mengoni, in RDCo 1956, II, 365.

82Sacco and De Nova, Obbligazioni e contratti.

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on a wide interpretation of article 1439 c.c., using together the concepts of presupposizione, culpa in contrahendo and dolo (fraud). Up to now, however, only a very few decisions have applied article 1337 c.c. in order to sanction a party’s failure to disclose information; the courts traditionally use it only to sanction unjustified withdrawal from negotiations.

A contract may be rendered voidable (anullabile) under the doctrine of the ‘basic contractual assumption’.83 We can consider the contract based on an implied condition, as if the parties have negotiated on the basis that ‘the contract will not stand if A’s harvesting machine cannot harvest one acre a day’. The breach of this condition renders the contract voidable.84 The Italian courts often find the presupposizione in contracts for the sale of land85 and in relational contracts, and article 1467 c.c. on contracts for mutual counter-performance86 has been seen by courts as the explicit adoption of the presupposizione principle by the legislature.87 It would certainly be innovative if a court were to use this doctrine to render this contract voidable, but it is not impossible.

Italian courts sometimes use indifferently the doctrines of presupposizione, the sale of aliud pro alio88 or mistake89 according to particular

83The presupposizione doctrine has a German origin. For an extensive discussion, see A. Pontani, ‘La presupposizione nella sua evoluzione, con particolare riferimento all’errore ed alla causa’ Quadrimestre 1991, 833.

84Cass 17 Sep. 1970, n. 1512, FI 1971, I, 3028; Cass 7 Apr. 1971, n. 1025 FI 1971, I, 2574; Cass 22 Sep. 81, n. 5168, FI 1982, I, 104; Cass 31 Oct. 1989, n. 4554, RDC 1990, II, 350; Cass 11 Aug. 1990, n. 8200; Cass 3 Dec. 1991, n. 12921, GI 1992, I, 1, 2210, note Oddi: the last case involved a purchase of shares of a company annulled when the only immovable good in the company’s asset was under an action to obtain revocation (art. 2901 c.c.); Cass 1995, n. 1040; Cass 1995, n. 8689.

85Cass 1983, n. 6933, Cass 1984, n. 5512.

86Article 1467: ‘In contracts for continuous or periodic performance or for deferred performance, if extraordinary and unforeseeable events make the performance of one of the parties excessively onerous, the party who owes such performance can demand dissolution of the contract, with the effects set out in article 1458. Dissolution cannot be demanded if the supervening onerousness is part of the normal risk of the contract. A party against whom dissolution is demanded can avoid it by offering to modify equitably the conditions of the contract.’

87Cass 1995, n. 1040; Cass 31 Oct. 1989, n. 4554, RDC 1990, II, 350; Cass 1986, n. 20.

88Article 1497: ‘When the thing sold lacks the qualities promised or those essential for the use for which it is intended, the buyer is entitled to obtain resolution of the contract according to the general provisions on the resolution for non-performance (art. 1453ff.), provided that the defect in quality exceeds the limits of tolerance established by usage. However, the right to obtain resolution is subject to the forfeiture (2964ff., 1495 co.1) and prescription (2946ff., 1495 co.3) established in art. 1495.’

89Trib. Napoli, 24 June 1970, in Giurisprudenza di merito I, 1972, 407, note Baldanzi; Cass 8 June 1948, n. 864, GI 1949, I, 1, 174.

facts. B’s position will be stronger by arguing that A was in bad faith or did not fulfil a standard of fair dealing during the bargaining process. According to the Tribunale of Milan, ‘presupposizione and essential mistake are two different aspects of the same factual situation; the principle of good faith90 adds strength to the argument in favour of the presupposizione when it is a practical criterion for the interpretation of the contract’.91 The presupposizione can be considered as the stronger approach for B where A makes no statement about the harvester. The remedy available will be annulment of the contract92 (recovery of only the price and expenses, not the lost crops). B is unlikely to demonstrate a dolo omissivo and recover damages for lost crops.

Netherlands

During negotiations A has made a false statement on which B relied when he concluded the contract. Therefore, B may in principle annul the contract for mistake93 and, if the false statement was intentionally made, for fraud.94 However, the mere annulment and, as its consequence, restitution of the machine and the contract price, would not take away or compensate all the loss that B has suffered from relying on A’s untrue statement. It is disputed under Dutch law whether B can recover his additional loss under tort or under precontractual liability (good faith). Some scholars argue that he can, since all his loss should be compensated.95 Others argue that in such a case the expectation interest should not be compensated.96 Therefore, the outcome of this case under Dutch law is uncertain. However, if B manages to prove that he had a specific opportunity to buy a similar machine from a third party but gave up the opportunity to conclude a contract with that

90Buona fede; arts. 1337 and 1375 c.c.

91Trib. Milano, 11 Oct. 1948, in DL II, 1949, 17, where the mistake was on the essential quality of the counterpart, but the judges used the presupposizione doctrine instead of the essential mistake rule. In favour of a broad interpretation of presupposizione: Cass 3

Oct. 1972, n. 2828.

92 Article 1441 c.c. 93 Article 6:228(1)(a) BW. 94 Article 3:44(1)(3) BW.

95See, e.g., Castermans, De mededelingsplicht in de onderhandelingsfase, p. 135; M.A.B. ChaoDuivis, ‘Schadevergoeding bij dwaling: de veroorzaker betaalt’ Themis no. 6, June 1990, 261; M.M. van Rossum, ‘De schadevergoedingsplicht bij dwaling en negligent misrepresentation’ WPNR 5928 (1989).

96Hartkamp, Mr. C. Asser’s handleiding tot de beoefening van het Nederlands burgerlijk recht; Verbintenissenrecht, vol. II, Algemene leer der overeenkomsten, p. 513; M.W. Hesselink, ‘De schadevergoedingsplicht bij afgebroken onderhandelingen in het licht van het Europese privaatrecht’ WPNR 6248–6249 (1996).