Pre-contractual negotiations

Introduction

Before parties contract with each other they usually start with negotiating the terms under which they wish to be bound. Such is especially the case with regard to major deals. While parties are negotiating they are in the pre-contractual stage, hence it is referred to as the pre-contractual negotiations. When doing cross boarder business, it is relevant to know what laws (being national or international) regulate the pre-contractual negotiations as legal systems differ.
In negotiating with a foreign party, it is important to research the foreign country’s negotiating norms. There are numerous sources of international contract law, but the applicable law will usually be the law of the country of one of the parties or a neutral country’s law. Courts and especially arbitration tribunals often …show more content…
In most European legal systems conducting parallel negotiations is in itself not considered to be in bad faith. It is very common in practice, and essential to a market economy, to compare different proposals and to choose the most advantageous one. The French court held in Manoukian that conducting parallel negotiations in itself does not result in tortuous liability, but it must be conducted in good faith and must not lead to a situation where one party has the belief that a contract is to be concluded with her and is only informed that a contract has been concluded with a third weeks afterwards. French courts usually infer three types of duties form this general obligation of good faith, which are: a duty to inform, a duty of confidentiality and a duty not to behave inconsistently during the negotiations. Considering the above parallel negotiations do not constitute bad faith, yet the requirements for breaking off negotiations is the same as under point 1b and 2a. The negotiations may not be used to just acquire information to use to ones advantage but must be conducted with