USAGE AND PRACTICE PROBLEMS OF THE ROMAN RULE: "Nuda pactio

obligationem non parit".

"[...] a party who negotiates or breaks off negotiations in bad faith is liable for the losses
to the other party [...] It is bad faith, in particular, for a party to enter into or continue
negotiations when intending not to reach an agreement with the other party".
The problem of ascertaining the applicable law is more perplexing in the case of
contracts tan in almost any other topic.
INTRODUCTORY STATEMENT - Translation - Marcel FONTAINE Professor, Universit
Catholique de Louvain, Louvain-La-Neuve; Director, Centre de droit des obligations,
Louvain-La-Neuve; Member of the Council, ICC Institute of International Business Law and
Practice
For two days we are going to reflect together on the problems concerning the formation of
contracts and pre-contractual liability. - The topic is not new. In recent years it has been the
subject of numerous publications and various seminars. In each case these have emphasized its
importance and the current interest in it: These developments are justified by the breadth of the
phenomenon of negotiations in the present practice of international contracts. We are far from
the contracts of instantaneous formation of classic theory. Actual negotiations can take months
or years and one suspect that this period cannot pass in a legal vacuum or space.
The approach (tactic) of the present symposium is ambitious. Our program intends to confront
two matters in the hope that the confrontations will generate a better understanding of the
phenomenon in question and, perhaps, will generate some new ideas.
1. The first matter to be confronted is that of the judicial systems. The various systems of law
effectively offer great variety on the problems of contract formation, legal approach (style) of
negotiations and the possible liability related to those negotiations. In those countries where
the law of contracts is codified, there are scarcely (just) any texts on those problems except
sometimes concerning the offer and acceptance. Therefore, general principles must be applied,
but different countries apply these principles differently. The problems in question are not
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even clearly understood by the law: This situation is all the more marked in countries where
the law is not codified. Similar situations are noticed in these countries, as well as some
reticence at the introduction of legal constraints (limits) at the pre-contractual stage (time).
Some statutes do not require contracts to be made in writing; buy only to be evidenced by a
written document (Treitel, 1991). These differences create great uncertainty. Participants in
international negotiations are in danger of poorly appreciating the legal consequences of their
responsibility (behavior), as well as of agreements that can be concluded during discussions.
We are going to start by searching for some national solutions in order to discover and
confront different ways of tackling (attacking) these problems of contracts in gestation
(growth). In the case of a contract there may be a multiplicity of connecting factors: the place
where it is made; the place of performance; the domicile, nationality of business center of the
parties; the situation of the subject-matter; the nationality of the ship in the case of a charterparty and so on [] In other countries several different solutions have been reached. In the
United States of America a preference was formerly shown for a rigid and inflexible test,
represented by the place of contracting in some of the States but the place of performance in
others [] Most of the countries of the European continent adopt the doctrine of autonomy
under which the parties are free to choose the governing law, though divergent views obtain on
the question whether their freedom is absolute or is restricted to the choice of a law with
which the contract is factually connected. (NORTH's, 1987)
After a general comparative introduction by Professor Farnworth, a roundtable discussion will
bring together specialists from a few countries Chosen to offer a diverse sample of legal
systems. Professors Dreyer for Switzerland and Oke for Germany, Mr. Hamza for Egypt, and
Professors Schmidt for France and Goode for England will participate in it. With the report of
Professor Rigaux, we will also tackle (attack) the problems of the law applicable to incidents
which can mark this pre-contractual phase.
These problems are of burning interest precisely because of the diversity of solutions offered
by different legal systems. In the modern world, every country having a developed legal
system has its own set of conflict rules, which form part of its private law. Such rules differ
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from one country to another; these differences tend to undermine the purpose of the rules
(STONE, 2008). Like any other rules of a countrys private law, its conflict rules may be
harmonized with those of other countries by means of international treaties, and in this respect
much has been achieved by the conventions negotiated at the Hague Conference on Private
International Law. International law has been one of the techniques for regulating the relations
among nations in order to prevent these conflicts from arising and ameliorating their effects
when they occur. (METZGER, 1956)
Finally, thanks to the lecture of Professor Bonell, we will examine the manner in which these
questions can be answered by the Vienna Convention on the international sales of goods.
Dobson and Rob (2012) consider that the sale of goods is the most common of type of
commercial transaction. The term sale of goods embraces agreements which are apparently
very different []. They defined a contract of sale of goods as: a contract whereby seller
transfers or agrees to transfer the property in the goods to the buyer for a money consideration,
called the price. The hope is formulated that this first confrontation will result in a better
understanding of the Problem and will highlight not only the common points but also the most
significant differences among the systems considered.
2. With the second matter to be confronted, we will strive (try) to compare the current state of
national laws to that of practice.
It is well known that the law is often late in relation to the facts. Proof of this is found in the
area of international contracts where the practice is very dynamic, where it is constantly
meeting new challenges and where it is constantly inventing original formulae to meet them.
Sometimes these formulae are very distant from the traditional solutions offered by the
applicable law and in general they are much more elaborate.
In the, study of national laws we will probably notice that certain laws have some basic
approach (method) to meet the phenomenon of negotiating but this approach is often limited to
a few principles. Thus, for example, the phenomenon of letters of intent and other preparatory
or preliminary agreements goes largely (fundamentally) unnoticed. It is ignored by all the
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classical literature. It is only in the recent past that some authors have reserved a small place
for it: As for court decisions, they are still rare even though here and there one can already find
one or two notable cases.
This is why we wanted to have the first session, devoted to confronting national laws,
followed by a second confrontation where the principles defined in the first would be put to
the test of practice. This second confrontation itself will start from two different but
complementary approaches. On the one hand we will examine the practical experiences of'
negotiation in four characteristic but very different sectors: construction, buying and selling of
companies, the petroleum industry and technology transfers. On the other hand, we will study
a few cases some of which have already received wide attention and others which are taken
from the personal experience of the participants.
These two approaches are intimately interrelated; they will not be as distinct as they appear
(act) on the program. Thus by already creating certain regroupings, in the construction sector,
we will hear testimony from the actual practice of Mr. Goudsmit, followed by a lecture by Mr.
Jones on the specific problems related to bid bonds. In the petroleum sector, Mr. David will
present the very particular characteristics of different types of negotiations. Three lectures will
be devoted to the transfer of technology. Professor Huet, Mrs. Toubol and Professor Hertig
will present the theoretical foundations, followed by the particulars of confidentiality
agreements, a problem which is the most characteristic of the sector.
Company acquisitions will give rise to an occasion for Mr. Baum to deliver an account of his
experience arid some cases which have already occurred, before Professor Draetta comments
on two matters related to the judicial effects of agreements in principle tied to acquisitions of
participation. Finally Mr. Derains will give an account of the arbitration experience concerning
the interpretive value of negotiations.
These two complementary approaches should enlighten (inform) us in a very concrete manner
on the current practice of contract formation and on a few examples of the litigation which has
arisen, in order to highlight the problems created by insufficient legal regulation and to
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suggest, perhaps, the precautions which must be taken during negotiations. The phrase 'look
before you leap' has survived the test of time for a very good reason.
That, ladies and gentlemen, is what we propose to you. Such is the spirit of our program. Our
eminent speakers, coming from the most diverse perspectives of teaching and practice, are
going to offer their reflections to you. We are counting greatly on your reactions during the
discussions, that is to say your questions, your objections and your personal experiences.
Together, during the course of these two days, we can learn a great deal about the formation of
contracts and precontractual liability. The phrase 'look before you leap' has survived the test of
time for a very good reason.
- Please Cite as: Reference 'ICC (ed.), Formation of Contracts and Precontractual
Liability, Paris 1993' for 1 Trans-Lex Principles of Transnational Law. trans-lex.org/114000
En cach"www.trans-lex.org/114000".
- DOBSON, Paul and STOKES Rob. Commercial Law. London. Sweet and Maxwell. P. 3,7.
- CHESHIRE AND NORTHs. Private International Law. Eleventh edition. London.
Butterworths. P.448; 448-449.
- STONE, P. EU Private International Law. Harmonization of Laws. Northampton, MA,
USA. Edward Elgar. P. 3-4.
- TREITEL G.H. The Law of Contract. Eighth Editions. London. Sweet and
Maxwell/Stevens. P.167.
- METZGER, Stanley D. A Contract Approach to International Law. Lousiana. A symposium
on Legislation, June. Vol. 16, number 4 (consulted: 23.01.2016, 17h18) :
digitalcommons.law.lsu.edu/cgi/viewcontent.cgi?article=2396&... PDF file