First meeting of the CLC Legal Club in 2011 was devoted to the discussion of pre-contractual liability. The key speaker was Mr. Yuriy Popov, CLC Senior Legal Adviser.

Pre-contractual liability is based on the common duty to negotiate in a good faith and its purpose is to reimburse for the losses incurred by one of the parties to negotiations, which acted based on such good faith, through inequitable conduct of another.

This type of liability was first mentioned in Corpus Juris Civilis. In the 19th century Rudolf von Jhering developed a culpa in contrahendo doctrine. This doctrine has been introduced into the German Civil Code since 2001. It is also mentioned in French legislation, while in the US other tools are used, for example “estoppels”.

Provisions on this type of liability can be found in the UN Convention on International Sale of Goods (Part 2, Article 29), International Trade Principles (UNIDROIT, Art. 15) etc.

The Civil Code of Ukraine includes Article 216 on “legal consequences of invalidity of the treaty”; according to this Article damages caused to the party (or a third person) resulting from the void treaty should be reimbursed for by the party in fault.

In the course of discussion the legal club members stressed that this text of the Civil Code of Ukraine was obsolete and narrowed the pre-contractual liability, making it dependant on the treaty invalidity. This approach does not provide for the protective mechanism for the party to negotiations in case the agreement has not been concluded. Moreover, due to the complexity of the contractual process sometimes it’s difficult to determine when the agreement can be considered as concluded.

The discussion ended with the idea, that the current Article of the Civil Code of Ukraine should be revised; the Commercial Law Center volunteered to work at this revised version.

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