A Role For Tort in Pre Contractual Negotiations An Examination of English French and Canadian Law

A ROLE FOR TORT IN PRE-CONTRACTUAL NEGOTIATIONS?
AN
EXAMINATION OF ENGLISH, FRENCH, AND CANADIAN LAW1
PAULA GILIKER*
I. INTRODUCTION
The common law has traditionally regarded the question of pre-contractual

liability as a matter of contract formation.2 Where the claimant is able to
satisfy the rules of offer and acceptance, consideration, an intention to be
bound, and certainty, contract law possesses a number of tools capable of
resolving disputes arising prior to contract. For example, the courts will utilise
the law of misrepresentation and mistake and, if necessary, imply terms to
respond to questions such as the effect of pre-contractual representations or
whether the claimant should be paid for work commenced prior to contract.3
Notably where a transaction between two commercial parties has been
executed, the English courts have shown themselves particularly willing to
intervene and ensure the validity of the agreement reached between the
parties.4
This article will therefore address the more controversial situation where
the claimant has failed to satisfy the rules of contract formation, for example,
because of uncertainty or incompleteness, or simply because the parties cannot
reach agreement on specific terms. Here, under the rules of contract law, no
liability will ensue: the so-called ‘all or nothing approach’.5 Yet, this ‘bright
line’ may lead to considerable injustice. A number of studies have indicated
that in modern commercial negotiations, the negotiation period cannot always
* Senior Lecturer, Queen Mary, University of London.

1 A draft of this article was presented at the SPTL conference in Leicester on 10 Sept 2002
and at a staff seminar at Queen Mary, University of London. The author would like to thank the
Torts section, members of the Department of Law at Queen Mary, in particular Catherine
Macmillan, and Professor John Bell for their helpful comments. Any errors remain those of the
author alone.
2 See Chitty on Contracts 28th edn (London: Sweet & Maxwell, 1999) gen ed HG Beale,
2–103 ff; GH Treitel, The Law of Contract, 10th edn (London: Sweet & Maxwell, 1999) at 16–17;
M Furmston, Cheshire, Fifoot and Furmston’s Law of Contract 14th edn (London: Butterworths,
2001), at 73–7.
3 See, eg, Esso Petroleum Co Ltd v Mardon [1976] QB 801 (collateral terms and misrepre-
sentation).
4 See G Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25; Foley v Classique
Coaches Ltd [1934] 2 KB 1; Hillas v Arcos (1932) 147 LT 503.
5 See Cheshire, Fifoot and Furmston’s Law of Contract, op cit, at 75; J Beatson, Anson’s Law
of Contract 28th edn (Oxford: Oxford University Press, 2002), at 64–9.
[ICLQ vol 52, October 2003 pp 969–994]
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970 International and Comparative Law Quarterly
be dismissed as insignificant.6 Particularly in large-scale or complex transac-
tions, negotiations may take place in stages, over a long period of time, with
parties seeking to move gradually towards a formal agreement and becoming
increasingly committed in terms of time and expense. In such circumstances,
it would not be unusual for one party to commence work or production of
goods prior to formal execution of the contract, be it for reasons of conve-
nience, to meet strict deadlines or to demonstrate commitment to the transac-
tion. Should a contract fail to be recognised at law, it is inevitable in view of
such commitment, which is often expressly or implicitly induced by the other
party, that compensation will be sought to cover any losses incurred.
At present, English law, as seen below, permits only limited recovery,
which rests primarily on the law of restitution. This article will consider an
alternative approach: whether English law should move towards a more inter-
ventionist approach based on the principles of tort law. As will be seen, French
law is willing to impose obligations on negotiating parties prior to contract,
relying not on contract, but on the law of delict.7 Indeed, there is much to be
said for preferring a role for tort in this context. If the nature of the complaint
is that the negotiating party performed in the belief that a contract would ensue
and, on this basis, relied to his or her detriment, the claim is, in reality, one for
detrimental reliance, not for the fulfilment of the expectation of a contract.
Any claim thus falls more naturally within tort law than contract law. I will
proceed in four stages. The first section will highlight the nature of the prob-
lem by reference to two influential cases in English law. This will be followed
by consideration of the current tortious response, which will then be contrasted
with the position presently adopted in France. Finally, a further perspective
will be considered, namely the response of the Canadian Supreme Court.
Canada, a jurisdiction with obvious historical links with English and French
law, provides an excellent basis from which to attempt to reconcile these
different approaches and to consider whether a common law system can and
should adopt the more principled civil law approach. Such a comparison casts
light on the nature of English and French tort law and its ability to respond to
the problems which arise from the negotiation process.
6 See, eg, EA Farnsworth ‘Precontractual liability and preliminary agreements: fair dealing
and failed negotiations’ (1987) 87 Colum LR 217; RB Lake and U Draetta, Letters of Intent and
Other Precontractual Documents: Comparative Analysis and Forms, 2nd edn (London:
Butterworths, 1994); MP Furmston, T Norisada, and J Poole, Contract Formation and Letters of
Intent (Wiley, 1998). Few claims arise in practice from non-commercial negotiations where the
parties will normally be prepared to write-off any expenses incurred. As will be seen in this arti-
cle, most litigation therefore arises in the commercial context.
7 Whilst common law jurisdictions prefer the term ‘tort’, civil law jurisdictions will usually
refer to ‘delict’. This terminology will therefore be adopted in the text. It should be noted that
acceptance of pre-contractual liability is not confined to French law, but extends to other civil law
systems: see, in particular, the section on pre-contractual good faith in Cases, Materials and Text
on Contract Law (Oxford: Hart Publishing, 2002), ed H Beale, A Hartkamp, H Kötz, and D Tallon
at 2.2. Notably the Italian Codice civile, Art 1337 contains a general duty to negotiate in good
faith: ‘During the course of the negotiations and in the formation of the contract, the parties must
A Role for Tort in Pre-Contractual Negotiations? 971
II. THE NATURE OF THE PROBLEM IN PRACTICE
Two cases encapsulate the difficulties experienced by English law in dealing

with the question of liability arising during the negotiation period: Regalian
Properties plc v London Docklands Development Corp (Regalian)8 and
British Steel Corpn v Cleveland Bridge and Engineering Co Ltd (British
Steel).9 Both cases highlight the limitations of the contractual approach. In
Regalian, the dispute arose in the context of ‘subject to contract’ negotiations
for a large-scale development in the London Docklands. Negotiations had
collapsed, primarily due to delays which had occurred and the late 1980s prop-
erty crash, leaving Regalian with losses of £2.891 million resulting from
preparatory works undertaken in relation to the proposed development.
Although the fall in the residential property market rendered any claim in
contract financially unattractive to Regalian, it cannot be doubted that the term
‘subject to contract’ would have obstructed any claim in any event.10 Equally
in British Steel, the judge was unable to find a bilateral or even a unilateral
contract where there remained disagreement on essential terms.11 Here, the
dispute arose in relation to negotiations for the delivery of goods. On receipt
of a letter of intent, British Steel had agreed to supply the defendants with a
quantity of nodes for a building project in Saudi Arabia pending the prepara-
tion and issue of a sub-contract. Subsequent discussions had failed to resolve
all difficulties and no formal agreement had been reached. Following delivery
of the nodes, a dispute arose as to liability for late delivery, which led British
Steel to bring a claim on a quantum meruit. Again, considerable costs had been
incurred and British Steel had acted in good faith. Goff J held that where the
parties were still negotiating material contractual terms, such as price and
delivery dates, they had clearly not reached the required degree of certainty
which English contract law demands.
In such circumstances, Rattee J in Regalian was dismissive of any claim:
[W]here, however much the parties expect a contract between them to materi-
alise, both enter negotiations expressly . . . on terms that each party is free to
act in good faith.’ J Dietrich in ‘Classifying precontractual liability: a comparative analysis’

(2001) 21 LS 153 suggests a comparison between English law and the German doctrine of culpa
in contrahendo, which is based on a ‘grey’ area between contract and tort.
8 [1995] 1 WLR 212. Comment E McKendrick, ‘Negotiations “Subject to Contract” and the
Law of Restitution’ [1994] 3 RLR 100; MP Thompson, ‘Compensation for Pre-contractual
Expenditure’ [1995] Conv 135; G Virgo, ‘Anticipatory Contracts—Restitution Restrained’ [1995]
CLJ 243; J Mannolini, ‘Restitution where an Anticipated Contract Fails to Materialise’ (1996) 59
MLR 111.
9 [1984] 1 All ER 504. Comment SN Ball, ‘Work Carried out in Pursuance of Letters of
Intent—Contract or Restitution?’ (1983) 99 LQR 572.
10 See Rattee J above, at 231 and, generally, Pym v Campbell (1856) 6 E & B 370; Winn v Bull
(1877) 7 ChD 29.
11 See Goff J above, at 509–10.
withdraw from the negotiations at any time . . . any cost incurred by [either party]
in preparation for the intended contract will be incurred at his own risk.12
This is essentially the ‘all or nothing’ approach mentioned above.

Nevertheless, this does not prevent the courts permitting recovery outside
contract law. In British Steel, Goff J was prepared to rely on the law of resti-
tution or ‘unjust enrichment’ to ensure British Steel was compensated. In his
Lordship’s view, where both parties had confidently expected a formal
contract to eventuate and where, to expedite performance, one party had been
requested to commence the contract work, the law would impose an obliga-
tion on the party who made the request to pay a reasonable sum for that work.
Such an obligation arose ‘in quasi-contract or, as we now say, in restitution’.13
One may draw a number of conclusions from these cases. First, that
contract law at present is unwilling to intervene, but that the law of restitution
has proven itself to be sufficiently flexible and willing to respond to the
claimant’s action. Secondly, that this suggests that English law has no implicit
objection to pre-contractual liability and, indeed, this is supported by other ad
hoc means of intervention, such as under the law of misrepresentation or
estoppel. Thirdly, that the courts wish nevertheless to protect the parties’ ‘free-
dom to negotiate’ which requires an acceptance that at times parties will be
acting at their own risk. Any legal framework must reflect these concerns.
As I have discussed elsewhere,14 the restitutionary response does not
appear to provide an adequate response to pre-contractual liability.15 On the
basis that the foundation of the claim rests on the fact that the defendant has
been unjustly enriched at the claimant’s expense,16 a number of difficulties
arise. The requirement of ‘enrichment’ immediately confines claims to
circumstances where the defendant has received an identifiable gain. This will
lead to arbitrary results and ignores the question of the loss suffered by the
claimant. Further, pre-contractual damages do not fit easily into a regime of
‘gain-based’ damages. A court is unlikely to find the defendant enriched by
the foundations for an undesired building or detailed plans for a project which
is never to come to fruition and, indeed, a number of cases have struggled with
12 Rattee J above, at 231 (my emphasis). His Lordship noted that Regalian were acting under
the leadership of a very experienced operator in the property development market and thus were
fully aware of the risks involved.
13 Above, at 511 per Goff J, citing William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932;
Sanders & Forster Ltd v A Monk & Co Ltd [1980] CA Transcript 35; OTM Ltd v Hydranautics
[1981] 2 Lloyd’s Rep, 211, at 214.
14 See P Giliker, Pre-contractual liability in English and French law (Kluwer, 2002), chs 3 and
5; The Law of Restitution (London: Butterworths, 2002), ed S Hedley and M Halliwell, ch 13.
15 For specific difficulties arising from the judgment in British Steel, see SN Ball, ‘Work
carried out in pursuance of letters of intent—contract or restitution?’ (1983) 99 LQR 572, 577 and
the response of E McKendrick, ‘The battle of the forms and the law of restitution’ (1988) 8 OJLS
197 and M Garner, ‘The Role of Subjective Benefit in the Law of Unjust Enrichment’ (1990) 10
OJLS 42.
16 Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548.
this particular problem.17 Similar problems may be seen in relation to the iden-
tification of the ‘unjust ground’. It may be questioned whether suggested solu-
tions resting on the untested doctrine of ‘free acceptance’18 or ‘failure of
consideration’19 provide a coherent overall basis for pre-contractual liabil-
ity.20 Even Professor Jones, one of the leading proponents of restitution, has
recognised that ‘the reality is that the award concealed a claim for loss suffered
in anticipation of a contractual agreement which never materialised’.21
The aim of this article is therefore not to suggest how restitutionary analy-
sis may be modified, but to consider an alternative approach which does focus
on loss suffered rather than any formalistic search for gain. As indicated
earlier, there are a number of arguments which favour an approach based not
on contract or restitution, but on the law of tort. The primary argument has
already been raised: a claim for the pre-contractual liability is essentially one
for detrimental reliance loss. To award the claimant contractual damages
based on an incomplete contract would be to subvert the rules of contract law
and to over-compensate the claimant by ignoring the undoubted risks of the
negotiation process. Equally, the basis for the complaint is not essentially that
the defendant has benefited—as shown above this may be difficult to prove—
but that, due to the defendant’s actions, the claimant has incurred costs for
which he or she should be compensated. Tort is, on this reasoning, the obvi-
ous basis for recovery.
This raises one fundamental problem: on what grounds should tort law inter-
vene? Any such remedy should not disregard the clear risks involved in the
negotiation process and it is indeed vital that parties do not believe themselves
at risk from simply entering the negotiation process. This would be counterpro-
ductive in discouraging negotiations and contrary to the parties’ and society’s
economic interests. The obvious foundation must be the fact that the claimant’s
loss has been caused by abusive or wrongful negotiating behaviour by the defen-
dant. This, as will be seen below, is the position adopted by the French courts
17 See, eg, Regalian above, where Rattee J held at 225 that, while Regalian had incurred
expenses in obtaining and preparing for the expected contract, they had not rendered any benefit
to LDDC which would support a claim for compensation. Doubts also exist as to whether any
benefit was actually received by the defendant in William Lacey (Hounslow) Ltd v Davis [1957]
1 WLR 932 (although see Rattee J above, at 224), which is regarded by restitution lawyers as a
leading case in favour of liability. G Jones, ‘The law of restitution: the past and the future’, in
Essays on the Law of Restitution (Oxford: Clarendon Press, 1991), ed AS Burrows, at 5 suggests
that ‘it would perhaps have been wiser for the court to admit that it was awarding damages to
reimburse the plaintiff for the money he had spent at the defendant’s request’.
18 See P Birks, An Introduction to the Law of Restitution (Oxford: Clarendon Press, 1989), at
115; Ball loc cit, n 15, at 575 and McKendrick, loc cit, n 15.
19 See AS Burrows and E McKendrick, Cases and Materials on the Law of Restitution
(Oxford: Oxford University Press, 1997); AS Burrows (1988) 104 LQR 576; G Virgo, The
Principles of the Law of Restitution (Oxford: Oxford University Press, 1999), at 361.
20 See Giliker, Pre-contractual liability in English and French Law, op cit, at 87–9.
21 G Jones (ed), Goff and Jones: The Law of Restitution, 5th edn (London: Sweet & Maxwell,
1998), at 668 (my italics), although in the most recent edition (6th edn, 2002) at 26-008 and 26-
009), he acknowledges arguments in favour of free acceptance.
and operates to regulate the parties’ behaviour whilst acknowledging that inter-
vention should not take place where the parties are acting at their own risk. A
brief examination of English tort law reveals, however, that whilst some inter-
vention is permitted, the courts have moved away from any direct recognition of
a guiding principle, leaving isolated cases, identified only by the brave and the
few. The position in English law will be examined below.
III. THE ENGLISH LAW OF TORT
A claim for pre-contractual expenses is essentially one for pure economic loss
and English law adopts a restrictive approach to such claims. The spectre of
‘liability in an indeterminate amount for a indeterminate time to an indetermi-
nate class’22 continues to haunt English tort law. In seeking recovery, the
claimant must therefore identify a tort for which the courts are prepared to
award damages for pure economic loss. As a result of the English system of
nominate torts, the emphasis immediately falls on finding a tort which
provides a suitable ‘fit’ rather than a more principled consideration of the
merits of the particular case. The most logical options would appear to lie with
the intentional torts protecting economic interests (the so-called ‘economic
torts’), for which damages for pure economic loss are awarded without ques-
tion, or with the tort of negligence.
Whilst intentional economic torts would appear to offer the most suitable
basis for protection, in practice, they have been confined to a limited set of
circumstances, arising primarily in the context of labour law and involving
three-party situations. Despite the fact that ‘the purpose of the economic torts
is to protect a person in relation to his trade, business, or livelihood’,23 the
‘core economic torts’24 have been confined to those of conspiracy, inducing
breach of contract and intimidation. Such a refusal to extrapolate general prin-
ciples of liability has effectively stultified their use outside these contexts.
Only the ‘misrepresentation’ tort of fraud or deceit offers any general assis-
tance and this, as will be seen below, has been confined to fraudulent state-
ments which intentionally deceive the other party. These torts additionally
reveal a further obstacle facing the English claimant. If one can identify any
general principle, it is that liability rests on the use of ‘unlawful means’25 by
22 Ultramares Corp v Touche 255 NY Rep 170, 179 (1931); 174 NE Rep 441, 444 (1931) per
Cardozo CJ.
23 BS Markesinis and SF Deakin, Tort Law, 4th edn (Oxford: Clarendon Press, 1999), at 466.
See, generally, H Carty, An Analysis of Economic Torts (Oxford: Oxford University Press, 2001),
Clerk & Lindsell on Torts 18th edn (London: Sweet & Maxwell, 2000), ch 24 and JD Heydon’s
classic, Economic Torts, 2nd edn (London: Sweet & Maxwell, 1978).
24 See Clerk & Lindsell on Torts, op cit, para 24.01. Carty, op cit, at 2–4 prefers the term
‘general economic torts’ as distinct from ‘misrepresentation torts’ such as deceit, malicious false-
hood and passing off.
25 Identified, generally, as consisting of all common law crimes and torts, although breach of
contract and breach of regulatory statutes have proved more controversial: see Clerk & Lindsell,
op cit, which notes at 24–34 that the definition may differ according to the different torts.
the defendant with the intention of injuring the claimant. Recognition of the
genus tort of ‘unlawful interference with trade’26 has not prevented the courts
from continuing to require intentional interference with the business of
another by unlawful means. It has long been accepted that driving a hard
bargain or tough negotiating is not regarded as ‘unlawful means’ by English
law.27 Just as contract law deems the negotiation period to be a time of risk,
the courts are unwilling to utilise economic torts to intervene to regulate pre-
contractual behaviour, despite the fact that economic loss has been suffered by
one commercial party. Equally, pure self-interest is not generally regarded as
indicative of an intention to harm. As Cane notes, ‘intentional infliction of
economic loss on one’s competitors by lawful conduct is of the very essence
of the free market.’28 This raises a fundamental question: is the English law of
tort prepared to award any compensation when faced with a claim arising from
‘competitive’ conduct in the course of pre-contractual negotiations, in spite of
the losses incurred by the other party? If such conduct is not judged to amount
to fault, it will be difficult to find any basis for recovery.
There is some support, however, for recovery in the law of misrepresenta-
tion. Fraudulent misrepresentation would appear to be the sole economic tort
applicable in this context, and to this may be added the tort of negligent
misrepresentation. Negligence, generally, offers little scope. Claims for pure
economic loss are regarded as exceptional,29 and in practice, most successful
claims have arisen in the context of negligent misrepresentation or from the
negligent performance of services.30 The law of misrepresentation would thus,
at present, appear to be the most realistic option for recovery in English law.
26 See Carty, op cit, ch 5, ‘Intentional violation of economic interests: The limits of common
law liability’ (1988) 104 LQR 250 and ‘Unlawful interference with trade’ (1983) 3 LS 193; T
Weir, ‘Chaos or cosmos? Rookes, Stratford and the Economic Torts’ [1964] CLJ 225 and
Economic Torts (Oxford: Clarendon Press, 1997); GHL Fridman, ‘Interference with Trade or
Business’ (1993) 1 Tort L Rev 19, 99; Torquay Hotel Co Ltd v Cousins [1969] 2 Ch 106 at 139
per Lord Denning; Merkur Island Shipping Corpn v Laughton [1983] 2 AC 570, 609–10 per Lord
Diplock; Lonrho plc v Fayed [1990] 2 QB 479.
27 See Mogul Steamship Company Ltd v McGregor, Gow & Co [1892] AC 25; Allen v Flood
[1989] AC 1, which have been said to ensure ‘some elbow-room for the aggressive pursuit of self-
interest in a society dedicated to free enterprise’: JG Fleming, The Law of Torts (LBC Information
Services, 1998). Although conspiracy to injure does not require unlawful means, it is likely that
the parties would be able to justify their conduct in that they were acting legitimately to advance
their own self-interests (the claimant would also have to prove the concerted action of two or more
parties; one party will not suffice): see Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC
435.
28 P Cane, Tort Law and Economic Interests, 2nd edn (Oxford: Clarendon Press, 1996), at 155.
29 Murphy v Brentwood District Council [1991] 1 AC 398, overturning Anns v Merton LBC
[1978] AC 728: ‘[Pure economic loss] is not recoverable in tort in the absence of a special rela-
tionship of proximity imposing on the tortfeasor a duty of care to safeguard the plaintiff from
economic loss’, per Lord Bridge at 475.
30 See Hedley Byrne v Heller and Partners [1964] AC 465; Henderson v Merrett Syndicates
Ltd [1995] 2 AC 145; Spring v Guardian Assurance plc [1994] 2 AC 296; Williams v Natural Life
Health Foods Limited [1998] 1 WLR 830. This is, of course, inapplicable in this context in that
the complaint does not relate to the defective performance of services, but the fact that services
performed were not paid for.
The conditions for liability must, however, be met. The claimant must estab-
lish a representation of existing or past fact which influenced his or her
conduct. It is trite law that neither a misprediction, nor an expression of opin-
ion,31 nor intention will suffice.32 A statement or conduct suggesting that ‘a
contract is bound to ensue’ is likely therefore to be rejected as a statement of
future intent or a mere prediction,33 unless the court is prepared to construe
that either (a) it is a misleading statement as to the maker’s current state of
mind,34 or (b) a statement of opinion by someone possessing superior knowl-
edge or skill which implies that the representor is aware of facts which reason-
ably justify this opinion.35
Further difficulties arise in establishing fraud or a negligent breach of a
duty of care. A claim for fraudulent misrepresentation will require evidence
that a false statement of existing fact36 was made to the claimant ‘(i) know-
ingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it
be true or false’,37 with the intention that it should be acted on, and which, in
fact, induced the work performed.38 Whilst this does not require the claimant
to prove an intention to cause loss, the claimant must prove an intention to
deceive.39 It is not always easy to show that this is the intention of the defen-
dant in such circumstances.40 Negligence may be easier to prove, but the
claimant must establish a duty of care, which will not necessarily be a straight-
forward task.41 In commercial negotiations, it would be unusual for one party
to ‘assume responsibility’ for the other or to possess such superior knowledge
and skill that the other may reasonably rely upon him or her. Only rarely, then,
31 Bisset v Wilkinson [1927] AC 177.

32 See Treitel, op cit at 306; Anson’s Law of Contract, op cit, at 237–40.
33 See Maddison v Addison (1883) 8 App Cas 467.
34 Edgington v Fitzmaurice (1885) 29 Ch D 459 (a prospectus which falsely stated the objec-
tives of the company’s rights issue was held to have made a representation of fact—the fact in
question being the state of mind of the directors when issuing the document). This does not of
course prevent a defendant from subsequently changing his or her mind!
35 See Esso Petroleum Co Ltd v Mardon [1976] QB 801 and Smith v Land and House Property
Corpn (1884) 28 Ch D 7.
36 Edgington v Fitzmaurice (1885) 29 Ch D 459.
37 Derry v Peek (1889) 14 App Cas 337, 374 per Lord Herschell. Recklessness is deemed to
go beyond mere carelessness: Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All ER 573, 587;
Derry v Peek above at 373.
38 Downs v Chappell [1997] 1 WLR 426, CA.
39 See Polhill v Walter (1932) 3 B & Ad 114, 110 ER 43; Standard Chartered Bank v Pakistan
National Shipping Corp [1995] 2 Lloyd’s Rep 365, 373; Armitage v Nurse [1998] Ch 241, 251
per Millett LJ.
40 Nevertheless, the court in Richardson v Sylvester (1873) LR 9 QB 34 held that the plaintiff
did have a cause of action in deceit where he had been encouraged by the defendant’s advertise-
ment for the letting of a farm to incur expenses inspecting and valuing the premises only to find
that the defendant had no power to let the premises and had ulterior motives for placing the advert.
The tort also possesses a very generous test of remoteness (Doyle v Olby Ltd [1969] 2 QB 158, at
167).
41 See Hedley Byrne v Heller and Partners [1964] AC 465; Henderson v Merrett Syndicates
Ltd [1995] 2 AC 145. In the absence of a contract, the Misrepresentation Act 1967 is clearly inap-
plicable: see s 2.
will the relationship be one which the law would be prepared to classify as a
‘special relationship’. This suggests a limited role for negligent misstatement
in English law. The very nature of the doctrine would appear to limit the extent
of liability possible in tort.
Nevertheless successful cases have been brought. In Esso Petroleum Co
Ltd v Mardon,42 a forecast of the potential annual throughput of a petrol
station by a representative of Esso was held to amount to a statement of fact
by virtue of his special knowledge and experience of the petrol trade. This
statement, made in the course of negotiations for a lease of a petrol station,
rendered the representor liable for damages for negligent misstatement.
Most notably, in Box v Midland Bank43 in 1979, the court overcame objec-
tions based both on the technical requirements of negligent misrepresentation
and the traditional opposition to claims for pure economic loss, and awarded
compensation for losses incurring during negotiations for an overdraft. Here,
Box had met his bank manager and had been assured that, although his appli-
cation for an overdraft would have to be made to the Regional Head Office,
consent would be a formality. Unfortunately, this was incorrect and the appli-
cation was rejected. Counsel for the bank submitted that the bank manager had
done no more than express his opinion in the matter; it was not a statement of
fact. Lloyd J was unconvinced:
the distinction between fact and opinion has become less important since the
decision of the Court of Appeal in Esso Petroleum Co Ltd v Mardon. I can see
no real difference between the forecast of the likely throughput in that case and
the forecast of the likely decision by regional head office in the present case.
Both can, if necessary, be regarded as statements of fact; in the present case as
to the existing policy of the bank with regard to applications.44
Yet Box is an isolated case. It is a decision of the High Court and has yet to be
followed in this context.45 Further, it is clear in reading the judgment of Lloyd
J that he regards the question as a matter of little importance; a factor which
may only be explained by recognising that, in 1979, the English law of tort,
following Anns v Merton LBC,46 was in a period of expansion and had yet to
be confined by Murphy v Brentwood.47 Hence, the Court was able to advocate
42 [1976] QB 801.
43 [1979] 2 Lloyd’s Rep 391; [1981] 1 Lloyd’s Rep 434 (CA: appeal on costs).
44 Ibid, at 399.
45 A search of Lexis in July 2003 revealed that Box had been cited in only one reported case
(Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd (Hong Kong CA [1984] 1 Lloyd’s Rep 555)
and a number of unreported decisions (Stevens v Barclays Mercantile Business Finance Ltd (Ch
Div, 31 July 1997), Bankers Trust International PLC v PT Dharmala Sakti Sejahtera (QB
(Commercial Court), 1 Dec 1995), Coote v Barclays Bank Plc (CA, 13 Oct 1993), and Security
Plan Investments v Cornhill Insurance plc (QBD, 12 July 1992)). In all these decisions, it was
raised in passing to indicate that a bank could be found to owe a duty of care to its customer, or
to establish the nature of a pre-contractual representation.
46 [1978] AC 728.
47 [1991] 1 AC 398, overturning Anns v Merton LBC above.
openly ‘that the Hedley Byrne principle ought not to be surrounded by too
many limitations and qualifications’.48 The absence of any consideration of
the arguments deriving from freedom of contract or security of transactions,
which play so strong a role in modern legal reasoning, diminishes the force of
the decision. The emphasis is solely on the merits of the claimant’s action, and
subsequent case-law has shown no great eagerness to tackle the difficulties
raised by this generous approach.
The current legal position is thus succinctly expressed by Markesinis and
Deakin:
Normally, there will be no duty of care under Hedley Byrne between business
parties negotiating at arm’s length; each side will have to rely on their own
judgement or get a third party opinion. With reason, the courts take the view that
parties to pre-contractual negotiations will primarily look to their own interests
and not to those of each other.49
There seems little scope here for a general principle of liability. Save where
the claimant is able to satisfy existing forms of action, tort law is unlikely to
offer much scope for compensation. A number of reasons may be found to
explain this position. First, tort’s traditional hostility towards claims for pure
economic loss should be noted. In the hierarchy of interests protected by tort
law, pure economic loss is considered far below personal injury and property
damage. Further, the English courts are unwilling to subvert the clear position
taken by contract law and question its underlying philosophy of freedom of
contract.50 The dominance of such reasoning is expressed by Markesinis and
Deakin above, who, it may be noted, do not question that this position is
reached ‘with reason’. On this basis, claims will only succeed if the claimant
can identify and satisfy one of the ‘piecemeal solutions to demonstrated prob-
lems of unfairness’.51
Such a position may be contrasted with that of French law. The French
courts have demonstrated that one may accept the doctrine of freedom of
contract and yet still regulate the pre-contractual period through the medium
of delict. In the next section, I will examine the nature of the French response,
identifying its treatment of pure economic loss, and its use of the Code civil
and case-law to meet the needs of the commercial community, before moving
to consider whether, in the light of Canadian law, English law should consider
moving towards a similar approach.
48 Above, at 399.
49 Markesinis and Deakin, op cit at 93, citing in support the judgment of Glidewell LJ in Glen-
Mor Fashions Ltd v Jaeger Company Shops Ltd (CA) 20 Nov 1991 (unreported).
50 See Walford v Miles [1992] 2 AC 128 which accepts unquestioningly the adversarial nature
of the negotiation process. For challenges to this view, see below.
51 Interfoto Library Ltd v Stilletto Ltd [1989] 1 QB 433, 439 per Bingham LJ, who famously
contrasts the ad hoc approach of the English courts with the more principled position of civil law
to the making and carrying out of contracts.
IV. THE RESPONSE OF FRENCH LAW
French law has chosen to impose delictual responsibility in a wide range of

circumstances, although recognition by the Cour de cassation of its applica-
tion in the pre-contractual context has been relatively recent.52 The broad
terms of Articles 1382 and 1383 of the Code civil provide a general basis for
liability. Article 1382 states that:
Any act which causes harm to another obliges the person whose fault caused the
harm to make reparation53
Three essential criteria may be noted: fault (or faute),54 harm or loss and a
causal link between the two. Article 1383 elaborates on this: ‘Everyone is
liable for damage which he causes not only by his own act, but also by his
negligence or imprudence.’55 Faute is thus defined broadly and, in recent
years, has been applied in the pre-contractual context to both intentionally and
negligently committed harm (délit and quasi-délit). Provided the claimant
may show fault, immediate, certain and direct loss and a causal link, a claim
will lie.56 This provides an obvious contrast with the English system of nomi-
nate torts outlined above.
Perhaps most significantly, the French adopt a broad view of réparation inté-
grale which presents an obvious contrast with the more restrained English
concept of ‘full compensation’.57 Whilst English law accepts that compensation
52 See Cass com 20 Mar 1972 JCP 1973 II 17543, note J Schmidt. It should be noted that by
the end of the nineteenth century, French law had come to accept that some form of liability
should be imposed during the negotiation process, although strong disagreement existed as to its
form and content: see, eg, R Saleilles ‘De la responsabilité précontractuelle’ RTDC 1907 696. One
of the most influential of the early writers was the German jurist, Rudolph von Jhering: ‘Culpa in
Contrahendo’ (1861) 4 Iherings Jahrb¸cher 1, translated into French in 1893: ‘De la culpa in
contrahendo ou des dommages-intérêts dans les conventions nulles ou restées imparfaites’
Oeuvres choisies, trans O de Meulenaere (Paris, Marescq, 1893) tII, p1–100).
53 ‘Tout fait quelconque de l’homme, qui cause à autrui un dommage, oblige celui par la faute
duquel il est arrivé à le réparer.’
54 Although Art 1382 does not define ‘fault’, it is generally regarded as conduct below the stan-
dard of the reasonable man (un homme normalement avisé) in the same situation as the defendant.
55 ‘Chacun est responsible du dommage qu’il a causé non seulement par son fait, mais encore
par sa négligence ou par son imprudence.’
56 B Starck, H Roland, and L Boyer, Obligations: Responsabilité délictuelle (Litec, 1996) 5e
éd, Nos 190–191; F Terré, P Simler and Y Lequette, Droit Civil, Les Obligations (Dalloz, 1999)
7e éd, No 666; HL and J Mazeaud et F Chabas, Leçons de droit civil (Montchestien, 1998) 9e éd,
tome II, No 406.
57 For comparative studies of pure economic loss, see JM Van Dunné, ‘Liability for Pure
Economic Loss: Rule or Exception?’ (1999) 7 ERPL 397; Civil Liability for Pure Economic Loss
(Kluwer, 1996), ed EK Banakas; W van Gerven, J Lever and P Larouche, Tort Law (Oxford: Hart
Publishing, 2000) 2.4, BS Markesinis ‘La politique jurisprudentielle et la réparation du préjudice
économique en Angleterre: Une approche comparative’ [1983] RIDC 31 and Pure Economic Loss
in Europe (Cambridge: Cambridge University Press, forthcoming 2003), ed. M Bussani and VV
Palmer. More generally, see C von Bar’s interesting attempt to explore common elements of tort
law in EU states in The Common European Law of Torts (Oxford: Oxford University Press, 2000),
vol 2, part 1.
must be limited by concerns of overwhelming and crushing liability, French
law finds no such difficulty—indeed the term ‘pure economic loss’ does not
seem to be commonly used in France.58 Provided that the loss suffered is
certain and direct, there is no reason why the claimant should not recover.
There is therefore no immediate obstacle to a claim for such losses during the
negotiation period.59 The very generality of Article 1382 leaves it to the
courts, with the assistance of legal commentators (doctrine), to determine
whether the pre-contractual performer should be able to recover losses
incurred during the pre-contractual period.
A few examples will demonstrate the impact of intervention by the courts.
V. FRENCH LAW IN PRACTICE60
The leading example in French law remains the first decision of the Cour de
cassation in 1972.61 Here, intensive negotiations had taken place between the
claimant and the exclusive distributor in France of American-made machines
for the manufacture of cement pipes. In the course of negotiations, the
claimant had visited the United States to observe the operation of these
machines at considerable expense and had attempted to ascertain further infor-
mation, which the distributor was later found to have withheld. After the
sudden termination of all discussions, the distributor chose to contract with the
claimant’s competitor and agreed that it would not supply a similar machine
in that region for the following 42 months.
The Cour de cassation found that such conduct gave rise to delictual
responsibility. Focusing on the defendant’s knowledge of the claimant’s
expenses, his retention of the estimate requested by the claimant, and his
continuance of negotiations which induced the claimant to believe a contract
would ensue, the court concluded that the negotiations had been broken off
58 See C Lapoyade Deschamps in Civil Liability for Pure Economic Loss (Kluwer, 1996), ed
EK Banakas at 89, who comments that the terms ‘perte financière’, ‘manque à gagner’, and ‘perte
de profit ou de bénéfices’ are used interchangeably. D Jutras, ‘Civil law and pure economic loss:
What are we missing?’ (1986–7) 12 Can Bus LJ 295, 310 notes that ‘While civilian authors have
devoted much energy discussing the foundation of delictual responsibility, there is very little
scholarship on the development of a coherent theory of protected interests.’ This is in obvious
contrast to German law, see The German Civil Code: Bürgerliches Gesetzbuch (BGB) § 823 I
[Deliktischer Schadensersatzanspruch].
59 Equally, prior to contract, the rule of non-cumul will not obstruct claims in delict.
60 See P Chauvel, ‘Rupture des pourparlers et responsabilité délictuelle’ Dr et Patr 1996 no 43,
36; D Mazeaud ‘La genèse des contrats, un régime de liberté surveillée’ Dr et Patr 1996, no 40,
44 who declares that negotiations are no longer a ‘no-man’s land juridique’; P Mousseron,
‘Conduite des négociations contractuelles et responsabilité délictuelle’ RTDCom 1998 243.
61 Cass com 20 Mar 1972 JCP 1973 II 17543, note J Schmidt, Bull civ IV No 93, at 90 (Gerteis
c/Vilbert-Lourmat) and it is cited as such in the recent study of Beale et al, Contract Law op cit
2.F.77, 256–7. Comment G Durry RTDC 1972. 779. B Nicholas, The French Law of Contract,
2nd edn (Oxford: Clarendon Press, 1992), 70–1 notes that, on similar facts, an English court
would shrink from intervention.
suddenly (brutalement), unilaterally and without any legitimate reason,
contrary to the rules of good faith in commercial relations.
A more recent example may be seen in the Sandoz case of 1998.62 Here,
negotiations had taken place between Poleval and Sandoz for a period of 4
years, during which a number of meetings had taken place and proposals had
been made. Sandoz finally withdrew in 1990 citing internal difficulties, which,
it admitted, had nothing to do with the quality of the product in question. The
Cour de cassation found that, in so acting, Sandoz had shown a lack of fair-
ness (loyauté) and there was no good reason for its withdrawal at this stage of
the negotiation process. Chauvel in his note to the case suggests that at such
an advanced stage, it will be for the defendant to show a good reason for with-
drawing from negotiations.63 Whilst the courts accept that withdrawal at this
stage may be necessary for financial reasons,64 or because of a change in
circumstances,65 or simply because the parties cannot agree on a particular
point, the freedom to withdraw from the negotiation process is limited by the
law of delict, even where, as here, the case involves two commercial enter-
prises.66
A. Core Principles
Despite the generality of the codal provisions, it is possible to ascertain certain
considerations which will influence a finding of delictual responsibility. The
judgment of the Court of Appeal of Riom in 1992 highlights a number of
important factors. The court found that:
If freedom [of contract] is the main principle in the pre-contractual period and
includes the freedom to break off negotiations at any time, it is still true that
when the latter have reached a length and level of intensity such that one party
may legitimately believe that the other is about to conclude the contract and in
readiness encourages him to incur certain expenses, breaking off such negotia-
tions is wrong, causes loss and gives rise to reparation.67
62 (Sté Laboratoires Sandoz c/ Sté Poleval) Com 7 Apr 1998 D 1999.514, note P Chauvel, JCP
1998 E Jur 579, note J Schmidt-Szalewski. Note the Court of Appeal on the same facts found
contractual liability: see Versailles 21 Sept 1995 RJDA 1996/2 No 178, RTDC 1996.145 obs J
Mestre.
63 In contrast, where the negotiations are not advanced, there is no such requirement: Cass com
12 Jan 1999 Dr et patr 1999 chron No 2375, note P Chauvel; P Mousseron ‘L’avant-contrat’ JCP
1999 E No 44, 4–5.
64 Cass com 4 Apr 1995 Lexilaser No 749.
65 eg in Orléans, 19 Oct 2000 JCP 2001 IV 2003 negotiations broke down after one party had
publicly accused the other of falsifying accounts and threatened criminal proceedings. The Court
of Appeal found that such a loss of confidence was a good reason for the breakdown of negotia-
tions.
66 Schmidt-Szalewski in her note does suggest, however, that the court was influenced by the
fact that a small French company (Poleval) had been negotiating with a large multi-national.
67 (My translation). Riom 10 June 1992 RJDA 1992 No 893, 732, RTDC 1993.343 obs J
Mestre (SA Auto 26 c/ SA Rover-France)—appeal rejected: Cass com 11 Oct 1994 Lexilaser, No
1763.
Here, Rover-France was held liable for just over 3 million FF for breaking off
negotiations for a distribution agreement. Although the court was undoubtedly
influenced by the fact that the parties had been in a long-term business rela-
tionship and had negotiated for a considerable period of time, it is clear that
these are not essential conditions.68 A number of concerns are apparent:
(a) How far had the negotiations progressed? Had they reached an advanced
stage, or were the parties still acting at their own risk?
(b) Had one party been encouraged to incur costs in the belief that a contract
would eventuate?
(c) Had the other party acted in bad faith?
(d) Did the other party terminate the negotiations suddenly and without warn-
ing?
Whilst the question of liability will ultimately rest with the court in the light
of all the circumstances of the case, these core principles provide valuable
guidance.69 In addition, one may identify a number of scenarios in which the
courts have been willing to intervene and condemn conduct causing loss to the
other negotiating party. These will now be examined.
B. Factors triggering intervention

It is clear that the courts will condemn negotiating behaviour in which one
party, despite the obvious commitment of the other, has not demonstrated a
serious intent to contract. For example, in Ossona c/ Al Esayi,70 the Cour de
cassation was critical of a party who, despite being aware that he would need
a loan to complete the transaction, had let the other party assume that he could
pay the price out of his own funds. When his request for a loan was denied,
Ossona withdrew on the day before signature of the ‘promesse de vente’.71
The Commercial Chamber went further in 1994, requiring a party to withdraw
from negotiations where continuation was clearly not in the interests of the
68 As seen in Cass civ 6 Jan 1998 JCP 1998 II 10066 note B Fagès, Déf 1998.743 obs D
Mazeaud (Ossona c/ Al Esayi) where the court was prepared to find delictual liability despite the
fact that a mere 24 days has passed since the commencement of negotiations due to the advanced
stage of negotiations, the large sums involved and, in the view of Fagès, the bad faith evident in
the defendant’s conduct.
69 See Cass com 7.1 and 22 Apr 1997 D 1998.45, note P Chauvel, RTDC 1997.651 obs J
Mestre, and, generally, J Fraimout ‘Le droit de rompre des pourparlers avancés’ Gaz Pal 1 June
2000. For a discussion of the theoretical basis of liability, see Giliker, op cit, 130–2.
70 Cass civ 6 Jan 1998 JCP 1998 II 10066, note B Fagès. See also Rennes 8 July 1929 DH 1929
548 (encouraging clerk to believe practice would be transferred to him); Civ 3 Oct 1972 Bull civ
III No 491 (supermarket company requested owner of land to do work on property but subse-
quently withdrew from negotiations). Le Tourneau has suggested that this indicates a need for
transparency in the negotiation process: ‘La rupture des négociations’ RTDCom 1998.479, 484.
71 This is a preliminary contract by which the vendor commits himself or herself to sell to the
buyer. The buyer is not obliged to purchase, but risks losing any sum paid at the time of the agree-
ment (usually 5–10 per cent of the total purchase price) if he or she refuses to sign the final
contract without a good reason.
other party.72 This paternalistic approach, which criticised a company for
protecting its own interests in prolonging negotiations where the other party
did not possess sufficient funds to proceed, demonstrates the inherent risk of
a court failing to give sufficient attention to the risks of the market.
Another condition of successful negotiations must be the cooperation of
both parties. Where a party has chosen to enter negotiations which have
reached an advanced stage, he or she will be expected to cooperate and partic-
ipate constructively in discussions. For example, where a Japanese company
had made no effort to meet the administrative requirements necessary for a
contract to be concluded, the Cour de cassation found delictual liability.73
Whilst much will depend on the phase of negotiations reached, if discussions
have developed beyond the initial stages, negotiating parties are expected to
persevere and not fall at the first obstacle placed in their path.
A further basis for liability rests on the misuse of information gained in
confidence. In the course of negotiations, professional secrets may pass and it
is naturally a concern that, if negotiations fail, such information should not be
used or divulged by the other party. Whereas English law resorts to equity,74
the French law of delict is sufficiently flexible to found an action under the
general head of ‘concurrence déloyale’ or ‘parasitaire’, deeming unauthorised
use of confidential information to amount to fault.75 The courts especially
condemn parties who enter negotiations solely to obtain access to such infor-
mation.76
A more difficult question arises where one party has undertaken parallel
negotiations with a third party. Although not all commentators agree, it is
generally accepted that a negotiating party should not be liable in such circum-
stances,77 unless, of course, he or she has contracted otherwise.78 There are
inevitably exceptions to this rule. Where one party has undertaken negotia-
tions at an elevated price whilst conducting negotiations with others at a lower
72 Cass com 22 Feb 1994 Bull civ IV No 72, 55, RTDC 1994.850 obs J Mestre.
73 Cass com 7 Mar 1972 Bull civ IV No 83. Comment G Durry RTDC 1972.779 and G Morin
‘Le devoir de coopération dans les contrats internationaux: Droit et pratique’ (1980) 6 DPCI 9.
74 See Seager v Copydex [1967] 1 WLR 923 where Lord Denning held at 931 that ‘It depends
on the broad principle of equity that he who has received information in confidence shall not take
unfair advantage of it.’ See also AG v Guardian Newspapers Ltd (No 2) [1990] AC 109, 280–3
per Lord Goff. Generally, Halsbury’s Laws of England, (London: Butterworths, 1996 and 2002
update), vol 8(1), no 480–97.
75 Cass com 3 Oct 1978 D 1980. 55, note J Schmidt; Com 29 Nov 1960 Gaz Pal 1961.1.152.
Comment J Huet ‘Violation de la confidentialité des négociations’ Pet Aff 4 Apr 1990 and G
Forbin ‘How is confidential information to be managed during pre-contractual negotiations?’
[1998] RDAI/IBLJ 477
76 Cass com 3 Oct 1978 D 1980. 55, note J Schmidt; Paris 4 June 1992 RDPI 1993/49.68.
77 See, eg, Cass com 15 Dec 1992 RJDA 1993, No 296, 260, RTDC 1993.577 obs J Mestre;
Versailles 5 Mar 1992 Bull Joly 1992.636, note J Schmidt, RTDC 1992.752 obs J Mestre;
Bordeaux 11 June 1997 JCP E 1997 1 617 obs P Mousseron. Contra, M Fontaine ‘Les lettres d’in-
tention dans la négociation des contrats internationaux’ (1977) 3 DPCI 73 p108.
78 eg, by accepting an obligation d’exclusivité (to negotiate only with the other party) or an
obligation de sincérité (to inform the other party of any parallel negotiations).
price, the Cour de cassation has been willing to impose delictual liability.79
Equally, it has been suggested that if one party led the other to believe that he
or she was negotiating solely with that other and that a contract was practically
certain, whilst hiding the existence of parallel negotiations with a third party,
a court would find him or her to be at fault.80
Outside such obvious categories, it remains a question of fact for the court,
utilising the core principles stated above. It is important to appreciate,
however, that one of these core principles is freedom of contract. Whilst it is
willing to intervene to regulate pre-contractual conduct, French law is not
prepared to interfere with the ordinary risks of the negotiation process. On this
basis, it is accepted that, at least at the initial stage of negotiations, no liability
should ensue and that the parties act at their own risk.
The classic illustration of this principle may be found in the decision of the
Court of Appeal of Pau in 1969.81 Here, a builder had completed one flat in a
development and, being summoned on site to discuss further construction
plans, argued that the defendant should not have contracted with another
bidder without at least offering him the opportunity to bid against him. Whilst
acknowledging that parties owe certain duties of rectitude and fairness in
negotiating, the court held that preliminary work and provision of an estimate
fell within acceptable pre-contractual risks. Where two professionals were
negotiating, only fault which was patent and beyond discussion (faute patente,
indiscutable) would induce the court to consider the imposition of delictual
liability. Here, the defendant had used another builder because his prices were
more competitive—a risk any negotiating party should anticipate. Durry
suggests that in such circumstances the only conceivable example of faute
would be to give work to a tenderer not providing the lowest possible price.
It would be wrong therefore to view French law as constituting mere ad hoc
intervention. It is possible to identify factors which indicate a finding of delict-
ual responsibility and set standards of conduct for the negotiating community.
The French courts accept that negotiations involve a period of risk, but that, at
a certain point, intervention is necessary to impose certain duties of good
conduct—‘obligations de loyauté et de bonne foi’ (fairness and good faith)—
on the parties. There is thus a line to be drawn between the period of risk and
the stage at which the negotiations have advanced such that a relationship of
confidence exists between the parties. As seen above in the decision of the
Commercial Chamber in 1994,82 this may not always be drawn correctly. In
practice, much will depend on the factual scenario facing the court, but where
79 Cass civ 4 June 1997 RTDC 1997.921.

80 JM Mousseron, Technique contractuelle, 2nd edn (Lefebvre, 1999), at 50.
81 Pau 14 Jan 1969 D 1969. 716; G Durry RTDC 1970. 358. See also Com 10 June 1986 Bull
civ IV No 123, 104, RTDCom 1987. 570 obs J Hémard et B Bouloc; Com 15 Feb 1965 Bull civ
III No 123, 105. This case also highlights the reluctance of the courts to impose liability between
two commercial parties due to their appreciation of the risks involved.
82 See n 72.
negotiations have led the claimant reasonably to expect a contract to eventu-
ate, French law is unlikely to deny him or her a remedy for the detrimental
reliance suffered when the other party terminates negotiations without due
notice.
VI. A FURTHER PERSPECTIVE: CANADIAN LAW
English and French law thus adopt very different approaches towards the role
of tort in pre-contractual negotiations. Whereas English law permits only
limited intervention, the French courts recognise a more extensive role, capa-
ble of reconciling commercial needs and the doctrine of freedom of contract.
In view of this disparity, it would seem inappropriate to suggest simply that
English law should follow its French counterpart. The differences between the
two systems, in terms of political structure and methodology, render such
resolution impractical. As recognised by Kahn-Freud, ‘[comparative law]
requires a knowledge not only of the foreign law, but also of its social, and
above all its political, context. The use of comparative law for practical
purposes becomes an abuse only if it is informed by a legalistic spirit which
ignores this context of the law.’83 In this final section, I will therefore attempt
to find a middle ground. Canada, with its two contrasting legal traditions and
close relationship with English and French law, provides an obvious point of
comparison. Indeed, the Canadian courts have been accused of having too
close a relationship with English law and failing, until the 1980s, to develop
their own jurisprudence.84 Whilst these two legal traditions are independent
and not to be confused, the fact that a minimum of three of the nine judges in
the Supreme Court must come from Québec85 signifies that the judiciary will
be conscious of the position taken in civil law even when considering ques-
tions of common law. The well-known decision of the Supreme Court in The
Norsk86 illustrates this clearly. The leading judgments of McLachlin87 and La
Forest88 JJ both use comparative law in their reasoning, although to reach
different conclusions.89
83 O Kahn-Freud ‘On Uses and Misuses of Comparative Law’ (1974) 37 MLR 1 at 27.
84 See B Feldthusen ‘The recovery of pure economic loss in Canada: Proximity, justice, ratio-
nality and chaos’ (1996) 24 Manitoba LJ 1 and ‘Pure economic loss in Canada’, in Civil Liability
for Pure Economic Loss (Kluwer, 1996), ed EK Banakas, 131: ‘I doubt whether there exists
another sovereign jurisdiction whose lower courts have so frequently discredited or ignored deci-
sions of their own appellate courts and turned instead to those of a foreign country.’ See also P
McCormick, Supreme at Last: The Evolution of the Supreme Court of Canada (Toronto: James
Lorimer, 2000).
85 See <http://www.scc-csc.gc.ca/aboutcourt/system>, GL Gall, The Canadian Legal System
4th edn (Carswell, 1995), 223.
86 Canadian National Railway Co v Norsk Pacific Steamship Co [1992] 91 DLR (4th) 289
(concerning contractual relational economic loss).
87 Above, at 363–5. 88 Above, at 319–25.
89 See also Stevenson J, ibid at 384: ‘The case at bar is a good example of how useful compar-
There is a further ground for examining Canadian law in this context. The
courts have, in relation to claims for pure economic loss, been willing to
discuss openly the policy issues which arise.90 This presents a marked contrast
with some of the English cases seen above.91 Such openness is particularly
helpful in identifying the determinant factors which influence the decision
whether pre-contractual liability should be imposed in a common law system.
One may also note that the courts, starting from Rivtow Marine Ltd v
Washington Iron Works,92 have developed a more flexible approach towards
claims for pure economic loss. This is illustrated most famously by the refusal
of the Supreme Court to reject Lord Wilberforce’s two stage test in Anns v
Merton LBC.93 This test was adopted by the Supreme Court in Kamloops
(City) v Nielsen in 1984,94 and although the Anns test was subsequently over-
turned by the House of Lords in Murphy v Brentwood,95 the Court in The
Norsk96 unanimously refused to follow suit. McLachlin J concluded that ‘from
ative law can be’ and the comments of Markesinis (1993) 109 LQR 5 at 11. It would seem that
their conflicting views have, to some extent, been reconciled in the subsequent Supreme Court
decision in Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd (1998) 153 DLR (4th)
385. Comment I Duncan Wallace QC ‘Contractual relational loss in Canada’ (1998) 104 LQR
370.
90 See, eg, The Norsk, above in which Justices McLachlin and La Forest engage in an overt
policy debate. For a critical discussion of the economic analysis used by the court, see D Cohen
‘The economics of Canadian National Railway v Norsk Pacific Steamship’ (1995) UTLJ 143 and
N Siebrasse ‘Economic analysis of economic loss in the Supreme Court of Canada’ (1994) 20
Queen’s LJ 1, who both favour the dissenting judgment of La Forest J. Contrast B Feldthusen and
J Palmer ‘Economic loss and the Supreme Court of Canada: An economic critique of Norsk
Steamship and Bird Construction’ (1995) 74 Can Bar Rev 427, who argue that whilst the judg-
ment of La Forest J is a step in the right direction, there are other economic considerations which
preclude recovery.
91 I am grateful to Catherine Macmillan for her suggestion that the greater emphasis on policy
by the Supreme Court of Canada may derive from the academic background of the judiciary in
contrast to the background of the English judiciary, which is, with a few notable exceptions, prac-
tice-based. Chief Justice McLachlin, for example, was formerly a professor of law at the
University of British Columbia, while Justice La Forest was Dean of the University of Alberta
Law School and a member of the Law Reform Commission of Canada prior to his appointment
to the New Brunswick Court of Appeal in 1981.
92 (1973) 40 DLR (3d) 530.
93 [1978] AC 728.
94 (1984) 10 DLR (4th) 641, Wilson J restating the Lord Wilberforce test. Comment J Irvine
‘Kamloops v Nielsen’ (1984) 29 CCLT 185; B Feldthusen ‘City of Kamloops v Nielsen: A
comment on the Supreme Court’s modest clarification of colonial tort law’ (1985) 30 McGill LJ
539. Applied in BDC Ltd v Hofstrand Farms Ltd (1986) 26 DLR (4th) 1; Rothfield v Manolakos
(1990) 63 DLR (4th) 449; Canadian National Railway Co v Norsk Pacific SS Co (1992) 91 DLR
(4th) 289; London Drugs Ltd v Kuehne & Nagel International Ltd (1992) 97 DLR (4th) 261;
Winnipeg Condominium Corp No 36 v Bird Construction Co (1995) 121 DLR (4th) 193; D’Amato
v Badger (1996) 137 DLR (4th) 129; Hercules Managements Ltd v Ernst & Young (1997) 146
DLR (4th) 577; Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd (1998) 153 DLR
(4th) 385.
95 [1991] 1 AC 398.
96 [1992] 91 DLR (4th) 289. Comment JG Fleming ‘Economic loss in Canada’ (1993) 1 Tort
L Rev 68; BS Markesinis ‘Compensation for negligently inflicted pure economic loss: Some
Canadian views’ (1993) 109 LQR 5; M McInnes ‘Contractual relational economic loss’ (1993) 52
CLJ 12; N Rafferty ‘Tortious liability for purely economic loss’ (1993) 9 PN 87.
a doctrinal point of view, this court should continue on the course charted in
Kamloops rather than reverting to the narrow exclusionary rule as the House
of Lords did in Murphy.’97 La Forest J concurred: ‘Murphy v Brentwood
District Council does not represent the law in Canada.’98 This remains the
case. In Hercules Managements Ltd v Ernst & Young,99 the Supreme Court
refused to alter its position when faced with a case on all fours with the
English case of Caparo Industries plc v Dickman.100 The law therefore contin-
ues to develop on a case-by-case basis, although the recent case-law has
accepted the categorisation proposed by Professor Feldthusen in his influen-
tial work: Economic Negligence: The Recovery of Pure Economic Loss.101
This does not, however, prevent new categories emerging.
On this basis, therefore, can it be argued that a system of law, which retains
Anns and is conscious of the more interventionist civilian position, should
accept the ability of tort to intervene as seen in Box in English law? Or,
perhaps more simply, should Canadian law welcome claims in tort for pure
economic loss arising in the course of pre-contractual negotiations?
Considerable assistance may be gained from the recent decision of the
Supreme Court of Canada in Martel Building Ltd v Canada,102 which deals
precisely with this question.
In Martel, the claim arose when a 10-year lease between the plaintiffs and
a government department (the defendant) was coming to a close and, follow-
ing some attempt at negotiation, the defendant resolved, in a weakening rental
market, to put the matter to tender. Having taken a number of different factors
into account, including renovation costs and security, a lease was taken with
another party. The Supreme Court found that, in the course of negotiations, the
97 Above, at 371. See also above, at 365: ‘[Canadian courts] will refuse to accept injustice
merely for the sake of the doctrinal tidiness which is the motivating spirit of Murphy.’
98 Above, at 303.
99 (1997) 146 DLR (4th) 577. Comment ME Deturbide (1998) 77 Can Bar Rev 260 (auditors
not liable to shareholders under stage 2 [policy reasons] in that liability where the statement is
used for a purpose or transaction other than that for which prepared could lead to indeterminate
liability). One may nevertheless question whether, despite the different tests utilised by the courts,
the similar results reached suggests that the tests are closer than they first appear. This is supported
by the recent decision of the Supreme Court in Cooper v Hobart (2002) 206 DLR (4th) 193.
100 [1990] 2 AC 605.
101 (Toronto: Carswell, 2000) 4th edn This work sets out the five categories of economic loss
cases, first put forward in (1990–1) 17 Can Bus LJ 356, and adopted by La Forest J in The Norsk
above, at 299–300, namely the independent liability of statutory public authorities, negligent
misrepresentation, negligent performance of a service, negligent supply of shoddy goods or struc-
tures and relational economic loss. See also AM Linden, Canadian Tort Law, 6th edn (Toronto:
Butterworths, 1997), at 405–6.
102 (2001) 193 DLR (4th) 1 Comment IN Duncan-Wallace QC ‘Tender call obligations in
Canada’ (2001) 117 LQR 351; N Rafferty ‘Tortious and contractual liability arising out of pre-
contractual negotiations and the tendering process’ (2001) 17 PN 179. This decision has since
been relied upon by a number of lower court decisions, most notably in Minardi v Clearly
Canadian Corpn [2001] BCSC 108 (no pre-contractual liability in tort in absence of negligent
misrepresentation). See also Gross v Great-West Life Assurance Company [2002] ABCA 37;
Anderson v Brouwer Claims Canada & Co Ltd [2002] BCSC 1043; 978011 Ontario Ltd v Cornell
Engineering Company Ltd (2001) 53 OR (3d) 783 (Ont CA).
department’s agent had ‘displayed casual contempt towards Martel and its
personnel as illustrated by broken appointments and general disregard of the
minimum courtesy Martel could have reasonably expected’.103 Such miscon-
duct was sufficient to persuade the Federal Court of Appeal to find breach of
an obligation to act and deal fairly in the negotiation process. Desjardins JA,
giving judgment, expressly rejected the claim of counsel that any such duty
would be incompatible with the long-standing principles of business effi-
cacy.104 Such a decision is significant in that it amounts to an implicit accep-
tance of the argument suggested above: that there is nothing inherently wrong
with tortious intervention at the negotiation stage provided a relationship of
proximity may be shown.
However, the Supreme Court of Canada refused to accept a role for tort in
the negotiation process. Despite the fact that the plaintiffs had satisfied the
stage one test of proximity due to their pre-existing leasehold relationship with
the defendant and the defendant’s apparent willingness to contract,105 the
claim fell at stage two of Anns: ‘whether there are any considerations which
ought to negative, or to reduce or limit the scope of the duty or the class of
person to whom it is owed or the damages to which a breach of it may give
rise.’106 Iacobucci and Major JJ, giving judgment,107 found ‘compelling’
policy reasons which indicated that ‘as a general proposition, no duty of care
arose in conducting pre-contractual negotiations’.108 The policy reasons given
reveal the influence of economic arguments forwarded by Professor
Feldthusen in the work mentioned above.109 Five main arguments stand out:
(i) The very nature of the negotiation process works against recovery. In
economic terms, the object of negotiations is to gain at the expense of the
other, which should be classified as a ‘transfer’ rather than a ‘loss’ of
wealth.
(ii) To hold a defendant liable for private, as opposed to social loss, would be
detrimental to society and deter economically efficient conduct, and ignore
the benefits to society from the negotiation process.
(iii) Intervention would amount to after-the-fact insurance against failures to act
with due diligence or hedge the risk of failed negotiations. ‘The retention of
self-vigilance is a necessary ingredient of commerce.’110
103 Above, at 19.

104 (1998) 163 DLR (4th) 504, 513, applying the Anns two stage test. The trial judge had equally
found a duty of care, but that the plaintiffs had failed to prove causation.
105 It should be noted that, on the facts, indeterminacy was not a problem. This will, of course,
not always the case.
106 Anns v Merton LBC [1978] AC 728, 751 per Lord Wilberforce.
107 The full court consisted of McLachlin, Gonthier, Iacobucci, Major, Bastarache, Binnie, and
Arbour JJ.
108 Above, at 18–20.
109 See Economic Negligence, 4th edn (Toronto: Carswell, 2000), which together with ‘Liability
for economic loss: Yes, but why?’ (1999) 28 UW Aust L Rev 84 and ‘Economic loss in the
Supreme Court of Canada’ (1991) 17 Can Bus LJ 356, was cited expressly in Martel.
110 Above at 20.
(iv) The court was, perhaps most importantly in relation to the arguments put
forward in this article, reluctant to extend negligence into the regulation of
commercial negotiations. This was considered undesirable, and that justice
was sufficiently served by existing heads of liability, for example, undue
influence, economic duress, unconscionability, and misrepresentation.111
(v) Liability ran the risk of encouraging a multiplicity of lawsuits and therefore
needless litigation.
The Court was firm in its advocacy of the bargaining process: ‘It would
defeat the essence of negotiation and hobble the marketplace to extend a duty
of care to the conduct of negotiations, and to label a party’s failure to disclose
its bottom line, its motives, or its final position as negligent.’112 Despite its
refusal to overrule the more flexible test of Anns v Merton LBC, the Supreme
Court found that policy reasons dictated that one party should not have to be
mindful of another party’s interests in commercial arm’s-length negotiations
and that, as a general proposition, no duty of care would arise in this context.
In affirming the arguments of freedom of contract and rejecting a role for tort,
the position taken by the Supreme Court suggests that a common law system
would have to consider very carefully before following its civilian counter-
part.
VII. CONCLUSION
Having examined the position in English, French, and Canadian law, a number
of conclusions may be drawn as to the potential role of tort law in pre-contrac-
tual negotiations. Despite their different legal frameworks, the English and
Canadian courts have reached similar positions.113 This derives from the
common acceptance of two key policy arguments: freedom of contract and a
reluctance to award damages for pure economic loss in tort.114 Although these
arguments overlap to a certain extent, freedom of contract entails the freedom
111 Note also LAC Minerals Ltd v Corona Resource Ltd (1989) 61 DLR (4th) 14 where the court
intervened on the basis of breach of confidence to impose a constructive trust: see G Hammond
‘Equity and abortive commercial transactions’ (1990) 106 LQR 207.
112 Above, at 19–20. The Court additionally threw further doubt on the concept of a duty to
bargain in good faith (at 21).
113 Note also the ‘landmark decision’ of Cooper v Hobart (2002) 206 DLR (4th) 193, which
arguably reduces the differences between English and Canadian law. A recent commentator has
suggested that Cooper ‘signals the end of the untrammelled expansion of negligence liability in
the Canadian context’: J Neyers ‘Distilling duty: the Supreme Court of Canada amends Anns’
(2002) 118 LQR 221. See also S Pitel ‘Negligence: Canada remakes the Anns test’ [2002] CLJ 252
and N Rafferty ‘The test for the imposition of a duty of care: Elucidation or obfuscation by the
Supreme Court of Canada’ (2002) 18 PN 218.
114 Although the Canadian courts appear more willing to address these questions directly, note
Lord Denning MR in Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd [1973] QB 27,
36: ‘At bottom . . . the question of recovering economic loss is one of policy.’ J Stapelton in ‘Duty
of care and economic loss: A wider agenda’ (1991) 107 LQR 249 argues for the need to articulate
clearly the policy basis for pure economic loss.
to negotiate and protect one’s self-interest at a time when both parties should
appreciate that they are acting at their own risk. Particularly in the commercial
context in which most litigation in this field arises, the courts will be unwill-
ing to act as insurers against the risks of the negotiation process. Further, the
inherent fears of pure economic loss—indeterminate liability, whether inter-
vention should extend to lesser economic interests—militate against recovery.
The courts, by refusing intervention, leave any questions to be dealt with
under the rules of contract law. Tort law will respect this position except in the
face of specific examples of abuse such as misrepresentation. As a result, a
pre-contractual claimant is likely to experience difficulties in bringing a
successful claim in English or Canadian law. As Cane observed in The
Anatomy of Tort Law,115 tort is essentially a balancing exercise and:
Responsibility for conduct must be balanced against freedom of action, and
people must be allowed, to some extent at least, to decide when risk-taking is a
desirable strategy for them personally.
In contrast, the French courts have proved themselves willing to intervene

and adopt a regulatory role. They are assisted in this by the very general word-
ing of Article 1382. In stating liability in terms of ‘any act’ which causes harm,
it avoids, combined with Article 1383, the division between intentional and
negligent conduct. The case-law examined above does not distinguish
between intentional and unintentional conduct, save that intentional conduct is
more likely to lead to a finding of delictual responsibility. The complexities of
Fowler v Lanning116 have no place in French law. The result is a more flexi-
ble approach, which is able to adapt to contemporary policy trends without the
shackles of the English system of nominate torts. Nevertheless, not all claims
will be welcomed. Despite the courts’ refusal to distinguish between different
types of loss or to adopt the common law concept of ‘duty of care’, delict
possesses a number of inherent limitations which reduce the number of
successful claims. A claimant must establish causation and that the damage
caused was certain and direct.117 These requirements are treated as questions
of fact—and therefore decided by the trial judge and not a superior court—and
operate as an informal screening process, although in practice this renders
them difficult to challenge (or analyse). Further, the courts do recognise that
at the early stage of the negotiation process, the parties will be acting at their
own risk and that legal intervention would be inappropriate. The arguments of
freedom of contract are noted and applied. Nevertheless, where the negotia-
tions have reached an advanced stage such that a relationship of trust and
115 (Oxford: Hart Publishing, 1997), at 95.

116 [1959] 1 QB 426 at 433 per Diplock J. This case raises the technical question whether unin-
tentional trespass to the person exists as a cause of action in English law. It also highlights the
continuing legacy of the old forms of actions on English tort law.
117 See J Herbots ‘Le “duty of care” et le dommage purement financier en droit comparé’ [1985]
Rev dr int et dr comp 7, 8 and D Marshall ‘Liability for pure economic loss negligently caused—
French and English law compared’ (1975) 24 ICLQ 748.
confidence has arisen between the parties, the courts are willing to intervene.
It is unduly pessimistic to describe this position as ‘riddled with uncer-
tainty’.118 As shown above, some basic principles may be found which estab-
lish a framework for intervention and it is possible to identify behaviour which
the courts will condemn as contrary to the rules of good faith and loyalty in
the negotiation process.
It must be questioned why three systems with similar economic needs have
reached such different legal positions. There is, indeed, no inherent obstacle to
liability in any of these systems. Whilst English and Canadian law currently adopt
a very restrained interpretation of tort law,119 it is not unknown for a common law
system to develop broader doctrines by analogy to existing law. Equally, the wide
terms of Article 1382 do not require the courts to interpret pre-contractual behav-
iour as giving rise to delictual liability. The answer must thus lie with the view
taken by the courts of their role in the negotiation process. Reliance or non-
reliance on the law of tort or delict manifests a choice between freedom of
contract and a belief in the positive regulatory force of the courts. The common
law courts, for example, have traditionally been reluctant to set down wider prin-
ciples beyond the case in question. Cane recently highlighted the perceived limi-
tations of tort as a regulatory mechanism, interpreting its role as providing ‘a set
of rules and principles of inter-personal responsibility for harm’.120 To this may
be added the common law’s tradition acceptance of the arguments of freedom of
contract. The well-known judgment of Lord Ackner in Walford v Miles121 illus-
trates clearly the limitations of English legal reasoning, and the Supreme Court of
Canada in Martel has followed this approach. In deferring to the dominance of
freedom of contract reasoning in contract law,122 tort law is denied any realistic
role in compensating for pre-contractual liability.
118 Marshall loc cit at 766.

119 Recent case-law indicates that the high point of Anns has passed in Canada. McLachlin J in
The Norsk above was really highpoint of judicial flexibility and seems to have provoked a back-
lash and accusations that the law lacks certainty and predictability: see EA Cherniak and E How
‘Policy and predictability: Pure economic loss in the Supreme Court of Canada’ (1999) 31 Can
Bus LJ 209, who note at 231, that: ‘Unfortunately, merging the ill-defined concept of policy with
the indefinite notion of proximity has created profound uncertainty.’ See also Feldthusen (1999)
loc cit at 100; S Harrington ‘Claims in tort for pure economic loss: A comparative view from
Canada’ [2000] IJIL 29.
120 See P Cane, ‘Tort law as regulation’ (2002) 31 Common Law World Review 305, 306, and
id, The Anatomy of Tort Law (Oxford: Hart Publishing, 1997).
121 [1992] 2 AC 128. Comment P Neill ‘A key to lock-out agreements?’ (1992) 108 LQR 405;
J Cumberbatch ‘In freedom’s cause: the contract to negotiate’ (1992) 12 OJLS 586; B Jamieson
‘When lock-out agreement enforceable’ [1992] LMCLQ 186; E Peel ‘Locking-out and locking-in:
The enforceability of agreements to negotiate’ [1992] CLJ 211. Consider also the doctrines of
caveat emptor (see, eg, Smith v Hughes (1871) LR 6 QB 597 and the classic case of Keates v
Cadogan (1851) 10 CB 591) and non-disclosure.
122 Note, for example, a number of English tort cases in which the court has refused to award
compensation for pure economic loss on the basis that this is primarily a matter for contract law
and that it is not for tort law to undermine the contractual regulation of risk: Simaan General
Contracting Co v Pilkington Glass (No 2) [1988] QB 758; Pacific Associates Inc v Baxter [1990]
1 QB 993.
In contrast, the approach adopted by the French courts must be viewed as
indicating a greater willingness to accept a regulatory role and thereby influ-
ence conduct beyond the case itself. Behaviour-modification is an inevitable
consequence, but justifiable in view of the demands of good faith in both the
negotiation and performance of contractual obligations. Most notably, this is
extended into the commercial context where, in clear opposition to the
common law position, it is accepted that commercial negotiations may give
rise to relationships of trust and confidence, which, if abused, give rise to
delictual liability.123 Such different treatment of commercial parties reflects
the background of each respective system: English law ‘designed for a nation
of shopkeepers’124 and French law ‘[giving] way to dirigisme . . . [which]
while over the last ten years or so . . . has been somewhat in retreat, its influ-
ence is still considerable’.125 It is inevitable that such different roles will be
reflected in the courts’ treatment of claims by commercial parties for losses
arising in the course of the negotiation process.
The question of tort-based liability is therefore not one of law, but of
policy. Should the courts intervene and, if so, on what basis? The common law
approach is one of restraint. Intervention is deemed contrary to the anti-regu-
latory nature of tort law, to provide no economic benefits and to be contrary
to the parties’ freedom to negotiate in their own interest. French law, in adopt-
ing a policy of intervention, accepts regulation as a positive step towards
improving the parties’ conduct and protecting the weaker party, and thus
implicitly places such values above those of economic efficiency. One may
take different views of the merits of the arguments used. For example, the
French courts have been accused by commentators of being unduly paternal-
istic and thereby ignoring the commercial context to the economic detriment
of the parties. This is exemplified in the decision of the Commercial Chamber
in 1994 raised above.126 Mestre comments that, in view of such case-law, ‘la
période précédant le contrat définitif, longtemps abandonnée à l’absolue
liberté des parties, devient donc un exercise bien délicat’.127 Equally, the
assumption by the common law courts that freedom of contract represents a
123 See, eg, the work of Professor Schmidt-Szalewski who finds liability to rest on the principle
of ‘confiance légitime trompée’: that is, liability will be imposed where the defendant has under-
mined a relationship of trust between the parties: Négociation et conclusion de contrats (Dalloz,
1982) at Nos 207–33, ‘La sanction de la faute précontractuelle’ RTDC 1974.46 and ‘La période
precontractuelle en droit français’ RIDC 1990.545. The concept was first used by Emmanuel
Lévy, see Les fondements du droit (F Alcan, 1933)
124 See O Kahn-Freud, C Lévy, and B Rudden, A Sourcebook on French Law (Oxford: Oxford
University Press, 1973), 286.
125 See J Bell, S Boyron and S Whittaker, Principles of French Law (Oxford: Oxford University
Press, 1998) at 309. See also C Jamin ‘Une brève histoire politique des interprétations de l’article
1134 du code civil’ D 2002.901 for the political background to the courts’ interpretation of the
Code civil.
126 Cass com 22 Feb 1994 Bull civ IV No 72, p55, RTDC 1994.850 obs J Mestre.
127 The period preceding the final contract, for a long time considered a period of absolute free-
dom of contract for the parties, thus becomes rather tricky in practice.
positive decision on the allocation of risks ignores parallel intervention in
restitution and a number of studies which suggest that negotiations do not
always operate upon an adversarial basis. For example, Palmer and Roberts in
their work, Dispute Processes, note a number of different strategies for the
negotiator to adopt, which involve both cooperation and competitive behav-
iour depending on the forum involved.128 Nevertheless, whilst the courts
continue to adhere to these positions, it must remain highly unlikely that the
common law courts will permit a role for tort in pre-contractual negotiations
similar to their French counterpart. Liability will thus remain on the ad hoc
bases of misrepresentation, estoppel and restitution. In rejecting ‘un véritable
pouvoir de contrôle des motifs de la rupture’,129 the common law affirms its
unwillingness to adopt the broad principles of civil law and its continuing
mistrust of intervention based on the principles of good faith.
128 (London: Butterworths, 1998) 3.6, although they deal solely with lawyer-based negotiations,
citing studies by C Menkel-Meadow ‘Lawyer negotiations: theories and realities—What we learn
from mediation’ (1993) 56 MLR 361; H Genn, Hard Bargaining: Out of court Settlement in
Personal Injury Actions (Oxford: Clarendon Press, 1987), and R Condlin ‘ “Cases on both sides”:
Patterns of argument in legal-dispute negotiation’ (1985) 44 Maryland L Rev 65. See also the clas-
sic empirical studies on contracting behaviour: S Macaulay ‘Non-contractual relationships in busi-
ness’ (1963) 28 Am Soc Rev 55; H Beale and T Dugdale ‘Contracts between businessmen:
planning and the use of contractual remedies’ (1975) 2 Brit J Law and Soc 45; I Macneil
‘Contracts: adjustment of long-term economic relations’ (1978) 72 Northwestern Univ LR 854 and
‘Economic analysis of contractual relations’, in The Economic Approach to Law (London:
Butterworths, 1981), ed P Burrows and CG Veljanovski.
129 Chauvel, note to Com 7 Apr 1998 D 1999.514, 515.

A Role For Tort in Pre Contractual Negotiations An Examination of English French and Canadian Law

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A Role For Tort in Pre Contractual Negotiations An Examination of English French and Canadian Law

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A ROLE FOR TORT IN PRE-CONTRACTUAL NEGOTIATIONS?

The common law has traditionally regarded the question of pre-contractual

* Senior Lecturer, Queen Mary, University of London.

[ICLQ vol 52, October 2003 pp 969–994]

II. THE NATURE OF THE PROBLEM IN PRACTICE

Two cases encapsulate the difficulties experienced by English law in dealing

act in good faith.’ J Dietrich in ‘Classifying precontractual liability: a comparative analysis’

This is essentially the ‘all or nothing’ approach mentioned above.

III. THE ENGLISH LAW OF TORT

31 Bisset v Wilkinson [1927] AC 177.

IV. THE RESPONSE OF FRENCH LAW

French law has chosen to impose delictual responsibility in a wide range of

V. FRENCH LAW IN PRACTICE60

B. Factors triggering intervention

79 Cass civ 4 June 1997 RTDC 1997.921.

VI. A FURTHER PERSPECTIVE: CANADIAN LAW

103 Above, at 19.

In contrast, the French courts have proved themselves willing to intervene

115 (Oxford: Hart Publishing, 1997), at 95.

118 Marshall loc cit at 766.

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