Everyone knows about contractual liability—the obligation to honor what you have signed. It is less well known that obligations arise even before a contract is signed, right during the negotiation process. That is exactly what pre-contractual liability is. It lasts from the moment negotiations begin until the contract is concluded.
The Civil Code distinguishes four situations where you can claim damages if pre-contractual liability has been breached. Each one applies to different conduct, has its own specifics, and will help you better understand exactly what pre-contractual liability is.
Someone negotiates with you for months, lets you invest time and money, yet never had any intention of signing the contract. It does not matter whether this intent was missing from the start or developed along the way. The result is the same; if you can prove "sham negotiations", you have the right to compensation for damages and lost profits.
During negotiations, each party must disclose to the other everything essential for concluding the contract. In other words, information without which the other party would not have entered into negotiations at all, or would have set different terms. This concerns not only the subject matter of the contract but also legal obstacles or other circumstances that could influence the other party's decision.
At first glance, this situation resembles the first one, but the similarity is only superficial. The fundamental difference lies in the fact that the conclusion of the contract must have already appeared highly probable. In other words, a situation where all essential terms have been agreed upon between the parties and recorded in writing, but the other party changes their mind immediately before signing without a legitimate reason and refuses to sign.
The final case covers situations where the other party not only fails to conclude the contract but also misuses or discloses informationobtained during negotiations, where such conduct may already be classified as a form of unfair competition.
A typical example is the sale of an e-shop. During negotiations, a buyer is legitimately interested in customers, suppliers, or technical solutions. If they subsequently use this information, for example, to set up their own competing e-shop, they are obligated not only to compensate for damages but also to surrender any enrichment gained through this conduct.
If any of the above situations occur, the injured party generally has the right to compensation for damages and, in some cases, lost profits. This means not only what they actually lost, but also what they would have earned had the breach not occurredIt is equally important to know when you are at risk of finding yourself in a similar situation and how to prevent it.
Furthermore, in the event of misuse or disclosure of confidential information, there is an obligation to surrender any enrichment gained by the party that misused the information. This obligation does not preclude the obligation to pay damages; both can arise simultaneously.
“However, in practice, it is not always about claiming damages. Pre-contractual liability often serves as an excellent bargaining lever for finding creative solutions. In one of our cases, the other party suddenly informed our client that they were withdrawing from the collaboration and that the planned contract signing the following week would not take place.
But as soon as we took the first steps toward claiming damages, the other party realized the risk they were facing. The result was that we sat back down at the table and concluded an entirely different deal, which ultimately proved much more interesting for our client.” adds attorney Jaroslav Čižmář
The line between a legitimate termination of negotiations and a breach is often thin and depends on the specific circumstances of each case. If you feel that the other party acted in bad faith during negotiations and caused you harm, it is worth investigating the situation. We will assess your case within 48 hours and tell you how to proceed. Email us at info@endors.cz or fill out our form.
