precontractual

Precontractual refers to actions, obligations, and representations that occur before a contract is formed. It encompasses negotiations, information exchange, due diligence, and preliminary documents such as letters of intent or term sheets. The precontractual phase is often critical because parties may incur costs and make decisions based on expectations that later influence the final agreement.

Legal treatment of precontractual duties varies by jurisdiction. In many civil-law countries, a general obligation to negotiate in good faith (often described as culpa in contrahendo or obligation pré-contractuelle) can give rise to liability for harm caused by bad faith, misrepresentation, or failure to disclose material information. In common-law systems, there is typically no broad duty to negotiate in good faith; liability tends to arise from specific wrongful acts during negotiations, such as misrepresentation, breach of confidentiality, or breaches of fiduciary or contractual promises that were relied upon.

Duties during the precontractual phase commonly include honest and timely disclosure of known facts, avoidance of deceptive statements, and fair dealings in the exchange of information. Parties may also seek to allocate risk and define binding versus non-binding status for preliminary documents. The binding nature of a precontractual instrument depends on its language and surrounding conduct; many such instruments are non-binding except for confidentiality or exclusivity clauses, while others may create binding obligations.

Consequences of breaches in the precontractual period can include damages for wasted costs, the loss of the opportunity to contract, or, in some systems, specific remedies for misrepresentation or breach of good-faith duties. Precontractual law thus aims to balance facilitating negotiations with protecting parties from opportunistic or misleading conduct. See also culpa in contrahendo, good faith negotiations.