he precontractual phase is the period during which the parties are negotiating the exact terms of the agreement. Although no official signatures have been placed and no agreement has yet been concluded during this period, the parties should be aware that a certain legal relationship may arise between them.
During the precontractual phase, the parties are negotiating the specific terms of the agreement. Consider, for example, parties who have not yet reached a concrete agreement on explicit pricing terms but have reached sufficient agreement regarding other terms of the agreement. Although there is not yet an actual agreement in the pre-contractual phase, the parties’ negotiations may be considered to have progressed so far that the parties may reasonably expect an agreement to be concluded.
Reasonableness and fairness
In principle, the parties’ freedom of contract takes precedence when entering into an agreement. However, because the pre-contractual phase can give rise to a legal relationship between the negotiating parties, the legal principle of reasonableness and fairness becomes crucial. Based on reasonableness and fairness, it is determined that the parties must take each other’s interests into account at the time the agreement is entered into. In short, terminating negotiations during the precontractual phase is permitted, unless such termination is unacceptable according to the standards of reasonableness and fairness.
Liability for Damages
When the parties are in the pre-contractual phase and negotiations are terminated without a valid reason, the terminating party may become liable for damages. If a negotiating party has raised a legitimate expectation that an agreement will be concluded, terminating the negotiations is considered unacceptable based on the principles of reasonableness and fairness. In that case, the terminating party becomes liable for damages to the other party. In some cases, a party may also be required to resume negotiations. This requires that liability in the pre-contractual phase be such that the other party cannot reasonably be expected to terminate the negotiations.
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