Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Who Should Bear the Costs of Failed Negotiations? A Functional Inquiry into Precontractual Liability

Who Should Bear the Costs of Failed Negotiations? A Functional Inquiry into Precontractual Liability WHO SHOULD BEAR THE COSTS OF FAILED NEGOTLVTIONS? A FUNCTIONAL INQUIRY INTO PRECONTRACTUAL LIABILITY* Wouter PJ. Wils' 1. Introduction when parties have been negotiating a contract or deal, and these negotiations collapse, the question often arises whether any of the parties should be held liable for the expenses made or losses incurred by the other side. This question is of obvious practical importance, and has received increasing attention from legal scholars and practitioners.l So far, however, it has never been systematically analysed from a functional viewpoint. The first part of the present paper purports to provide such analysis. We look at the incentives of negotiating parties to engage in costly action during the negotiations, and at their incentives to break off the negotiations or enter into the deal. We compare these incentives in the absence of any precontractual liability, and under the various possible liability regimes. Using well-defined normative criteria of wealth-maximization and fairness, we will be able to draw conclusions as to the desirable regime of precontractual liability. In the second part of the paper, we summarize our conclusions, and compare them with the existing law in a number of countries. It will appear that * The http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal des Économistes et des Études Humaines de Gruyter

Who Should Bear the Costs of Failed Negotiations? A Functional Inquiry into Precontractual Liability

Loading next page...
 
/lp/de-gruyter/who-should-bear-the-costs-of-failed-negotiations-a-functional-inquiry-OiBZD5CHkH
Publisher
de Gruyter
Copyright
Copyright © 1993 by the
ISSN
2194-5799
eISSN
2153-1552
DOI
10.1515/jeeh-1993-0105
Publisher site
See Article on Publisher Site

Abstract

WHO SHOULD BEAR THE COSTS OF FAILED NEGOTLVTIONS? A FUNCTIONAL INQUIRY INTO PRECONTRACTUAL LIABILITY* Wouter PJ. Wils' 1. Introduction when parties have been negotiating a contract or deal, and these negotiations collapse, the question often arises whether any of the parties should be held liable for the expenses made or losses incurred by the other side. This question is of obvious practical importance, and has received increasing attention from legal scholars and practitioners.l So far, however, it has never been systematically analysed from a functional viewpoint. The first part of the present paper purports to provide such analysis. We look at the incentives of negotiating parties to engage in costly action during the negotiations, and at their incentives to break off the negotiations or enter into the deal. We compare these incentives in the absence of any precontractual liability, and under the various possible liability regimes. Using well-defined normative criteria of wealth-maximization and fairness, we will be able to draw conclusions as to the desirable regime of precontractual liability. In the second part of the paper, we summarize our conclusions, and compare them with the existing law in a number of countries. It will appear that * The

Journal

Journal des Économistes et des Études Humainesde Gruyter

Published: Mar 1, 1993

There are no references for this article.