Culpa in contrahendo

Culpa in contrahendo, also referred to as pre-contractual liability, requires parties to take account of each other’s interests and to act with due care during contractual negotiations. A breach of this duty—for example, by furnishing misleading information or by breaking off negotiations without reasonable justification—may give rise to liability in tort or for infringement of the principles of reasonableness and fairness.

This doctrine is significant in that it protects parties against loss incurred during the pre-contractual phase, even where no contract is ultimately concluded. It promotes fair and transparent negotiations and guards against the abuse of a negotiating position.

In practice, culpa in contrahendo is frequently invoked in cases involving the termination of negotiations after substantial investments have been made or where incorrect information has been supplied during the pre-contractual stage.