The dilemma

Precontractual liability relates to liability from a specific temporal standpoint: the time before a contract has been created. Thus, the very definition of such liability is coupled with a dilemma: if a contract has not been created, why should precontractual liability be imposed? This liability apparently could not be based on contract, since a contract has not been created. On the other hand, if such liability is grounded, for example, either in torts or in restitution it might be incompatible with the contractual principle of no liability. The absence of contractual liability means that the parties are free not to deal. Liability based solely on negotiations might seem to override the negative freedom not to deal. This dilemma is well reflected in the different approaches adopted by the common law, on the one hand, and the civil or continental law, on the other hand.

Israeli law under the common law: no rule of precontractual liability

The common law does not recognise a general principle of good faith which might create a basis for precontractual liability. This derives from a wide application of the principle of the freedom of contract and from what seems to be ‘a respect for the contractual rules of the game’. It reflects adherence to the rule of law in the strict sense and to the values of certainty and predictability in law. It gives preference to rules over standards. It puts emphasis on a clear demarcation line between negotiations and contract. It encourages self-reliance.