Negotiations are aimed at concluding an agreement with a content beneficial to us. However, we must be careful about what we promise the other party to the contract, because the correct negotiation process should be based on trust, loyalty and honesty of its participants. If the contractor feels cheated, he may demand compensation from us based on the so-called culpa in contrahendo, i.e. fault in contracting.

Pursuant to Article 72 § 2 of the Civil Code (CC), „a party who has started or conducted negotiations in violation of good practices, in particular without the intention to conclude a contract, is obliged to repair the damage suffered by the other party because it counted on the conclusion of the contract”. Therefore, compensation will be due if the contract has not been concluded, and the other party to the negotiations, who broke good manners, is to blame.

What exactly does breaking good manners in contracting mean? The case-law stresses that this is not every case of breaking off negotiations. The Court of Appeal in Gdańsk in its judgment of 23 February 2016 (I ACa 911/15) pointed out, for example, that „in Article 72 § 2 of the Civil Code, the legislator does not stigmatize either tough negotiators who consistently strive to secure all their interests, or those who at the last stage break off negotiations due to a sudden opportunity to conclude an agreement more favorable than the negotiated one. No one is obliged to sacrifice his interests for the sake of another; In particular, such an obligation certainly cannot be justified by the requirement of good manners in negotiations. This last remark is particularly important in relations between entrepreneurs whose economic activity is focused on profit. Consequently, the tort under Article 72(2) of the Civil Code cannot be committed without being aware of acting against the interests of the other party.’

Not every break in negotiations is tantamount to a violation of good manners in contracting. The Civil Code allows hard negotiations and does not prohibit breaking them in the last phase of contracting.

In turn, the Court of Appeal in Katowice in its judgment of 28 November 2012 (I ACa 689/12), explaining the sense of the analyzed institution, states that „violation of good practices means behavior contrary to the idea of negotiations aimed at concluding a contract and is basically tantamount to acting in bad faith, which consists in a discrepancy of actual intentions with those declared towards the negotiating partner. In particular, it is important to strive to give the other party the impression that you want to conclude a contract and to keep it in this belief, because the essence of the tort is failure to meet a reasonably justified expectation for the conclusion of the contract, disappointing the contractor’s trust.”

Damages are awarded for negotiating in bad faith and by definition without the intention of entering into a contract. It is therefore a question of making good the damage for conducting pointless negotiations from the beginning (or from a certain point).

When claiming compensation on the basis of the so-called fault in contracting, it will be necessary to prove:

• start or conduct negotiations in violation of good manners,
• Damage
• the causal link between the alleged conduct of the party and the damage caused.

It should be emphasized that compensation is only due if the contract was not concluded as a result of disloyal negotiations. According to the Civil Code, compensation may be demanded for the damage suffered by the other party because it counted on the conclusion of the contract.

Therefore, the contractor may be required to reimburse such costs as:

• telephone conversations,
• Correspondence
• preparation of the offer,
• Notary
• fees paid,
• judicial related to obtaining copies of documents, etc.,
• Translation
• Travel
• stay of negotiators with the contractor,
• legal services.

Compensation for fault in contracting is limited to the costs incurred by the counterparty in connection with unsuccessful negotiations, the consequence of which was the non-conclusion of the contract.

As compensation, therefore, compensation cannot be claimed for fault in contracting, reimbursement of potential profits that would result from the contract not concluded.

A special type of disloyal behavior in the course of negotiations is sanctioned by Article 721 of the Civil Code. According to the regulation contained therein, if in the course of negotiations a party has made information available subject to confidentiality, the other party is obliged not to disclose or pass it on to other persons and not to use this information for its own purposes, unless the parties have agreed otherwise.

In the event of non-performance or improper performance of these obligations, the counterparty who entrusted the other party with confidential information may require the other party to repair the damage or return the benefits obtained by it. In this case, the claim is not limited to a negative contractual interest.

The conditions to be proved in court include:

• making confidential information available to the counterparty during negotiations;
• making confidential information available by the counterparty to third parties, in any form, or using it for its own purposes;
• reservation of data confidentiality (the contractor must know that he cannot disclose certain information).

If the above conditions are met, there will be a contractual obligation of the counterparty not to disclose the information provided to it. In the event of non-performance of the contract, the contractual partner may be required to repair the resulting damage.

Source: https://poradnikprzedsiebiorcy.pl/-odpowiedzialnosc-odszkodowawcza-za-negocjowanie-w-zlej-wierze