Good faith in pre-contractual liability: opportunistic behaviour in ex ante contract negotiations (Jel: K12, K42, D82, D86)

Angelo Castaldo, Elisabetta Conte and Gianluigi Galeotti

Mercato Concorrenza Regole, 2012, issue 3, 577-606

Abstract: During negotiations, parties plan an exchange that will occur in the future and thatimplies a high level of uncertainty, regarding both contract conditions and final outcome.In this phase, parties are requested, according to country-specific legal framework,to act in good faith. As a matter of fact, the definition of the boundaries of thegood faith principle could be used as a strategic variable to understand when a formof pre-contractual liability is both necessary and efficient. Once we have analyzedthe different models of pre-contractual liability in force in the main legal frameworks,our work focuses on clarifying the social function of the civil norm that introducespre-contractual liability, given the impact on agents' behaviour and on the level ofefficiency of the negotiations. We will focus mainly on two issues. First, the failureto disclose information as a breach of the duty to act in good faith and the cases inwhich the introduction of a duty to disclose is efficient; secondly, the hold up problemas a violation of the good faith principle and as opportunistic behaviour related to thelevel of reliance adopted by the party who hasn't made specific investment. Our aimis to identify and to explain the reasons of the efficiency enhancement given by theintroduction of a pre-contractual liability regime.

Keywords: pre-contractual liability; negotiations; contract; good faith; duty to disclose; reliance; hold up. (search for similar items in EconPapers)
Date: 2012
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