¹ A draft of this article was presented at the SPTL conference in Leicester on 10 Sept 2002 and at a staff seminar at Queen Mary, University of London. The author would like to thank the Torts section, members of the Department of Law at Queen Mary, in particular Catherine Macmillan, and Professor John Bell for their helpful comments. Any errors remain those of the author alone.Google Scholar

² See Chitty on Contracts 28th edn (London: Sweet & Maxwell, 1999) gen ed Beale, HG, 2–103 ff;Google ScholarTreitel, GH, The Law of Contract, 10th edn (London: Sweet & Maxwell, 1999)at 16–17;Google ScholarFurmston, M, Cheshire, Fifoot and Furmston's Law of Contract 14th edn (London: Butterworths, 2001), at 73–7.Google Scholar

³ See, eg, Esso Petroleum Co Ltd v Mardon [1976] QB 801 (collateral terms and misrepresentation).Google Scholar

⁴ See G Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd's Rep 25; Foley v Classique Coaches Ltd [1934] 2 KB 1; Hillas v Arcos [1932] 147 LT 503.Google Scholar

⁵ See Cheshire, Fifoot and Furmston's Law of Contract, op cit, at 75;Google ScholarBeatson, J, Anson's Law of Contract 28th edn (Oxford: Oxford University Press, 2002), at 64–9.Google Scholar

⁶ See, eg, Farnsworth, EA ‘Precontractual liability and preliminary agreements: fair dealing and failed negotiations’ (1987) 87 Colum LR 217;CrossRefGoogle ScholarLake, RB and Draetta, U, Letters of Intent and Other Precontractual Documents: Comparative Analysis and Forms, 2nd edn (London: Butterworths, 1994);Google ScholarFurmston, MP, Norisada, T and Poole, J, Contract Formation and Letters of Intent (Wiley, 1998). Few claims arise in practice from non-commercial negotiations where the parties will normally be prepared to write-off any expenses incurred. As will be seen in this article, most litigation therefore arises in the commercial context.Google Scholar

⁷ Whilst common law jurisdictions prefer the term ‘tort’, civil law jurisdictions will usually refer to ‘delict’. This terminology will therefore be adopted in the text. It should be noted that acceptance of pre-contractual liability is not confined to French law, but extends to other civil law systems: see, in particular, the section on pre-contractual good faith in Cases, Materials and Text on Contract Law (Oxford: Hart Publishing, 2002), ed Beale, Ft, Hartkamp, A, Kötz, Ft, and Tallon, D at 2.2. Notably the Italian Codice civile, Art 1337 contains a general duty to negotiate in good faith:‘During the course of the negotiations and in the formation of the contract, the parties mustact in good faith.’ J Dietrich in ‘Classifying precontractual liability: a comparative analysis’ (2001) 21 LS 153 suggests a comparison between English law and the German doctrine of culpa in contrahendo, which is based on a ‘grey’ area between contract and tort.Google Scholar

⁸ ‘1995’ 1 WLR 212. Comment McKendrick, E, ‘Negotiations “Subject to Contract” and the Law of Restitution’ [1994] 3 RLR 100;Google ScholarThompson, MP, ‘Compensation for Pre-contractual Expenditure’ [1995] Conv 135;Google ScholarVirgo, G, ‘Anticipatory Contracts—Restitution Restrained’ [1995] CLJ 243;CrossRefGoogle ScholarMannolini, J, ‘Restitution where an Anticipated Contract Fails to Materialise’ (1996) 59 MLR 111.CrossRefGoogle Scholar

⁹ [1984] 1 All ER 504. Comment Ball, SN, ‘Work Carried out in Pursuance of Letters of Intent—Contract or Restitution?’ (1983) 99 LQR 572.Google Scholar

¹⁰ See Rattee, J above, at 231 and, generally, Pym v Campbell (1856) 6 E & B 370; Winn v Bull (1877) 7 ChD 29.Google Scholar

¹¹ See Goff, J above, at 509–10.Google Scholar

¹² Rattee, J above, at 231 (my emphasis). His Lordship noted that Regalian were acting under the leadership of a very experienced operator in the property development market and thus were fully aware of the risks involved.Google Scholar

¹³ Above, at 511 per Goff, J, citing William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932; Sanders & Forster Ltd v A Monk & Co Ltd [1980] CA Transcript 35; OTM Ltd v Hydranautics [1981] 2 Lloyd's Rep, 211, at 214.Google Scholar

¹⁴ See Giliker, P, Pre-contractual liability in English and French law (Kluwer, 2002), chs 3 and 5;Google ScholarThe Law of Restitution (London: Butterworths, 2002), ed Hedley, S and Halliwell, M, ch 13.Google Scholar

¹⁵ For specific difficulties arising from the judgment in British Steel, see Ball, SN, ‘Work carried out in pursuance of letters of intent—contract or restitution?’ (1983) 99 LQR 572, 577Google Scholarand the response of McKendrick, E, ‘The battle of the forms and the law of restitution’ (1988) 8 OJLS 197CrossRefGoogle Scholarand Garner, M, ‘The Role of Subjective Benefit in the Law of Unjust Enrichment’ (1990) 10 OJLS 42.CrossRefGoogle Scholar

¹⁶ Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548.Google Scholar

¹⁷ See, eg, Regalian above, where Rattee, J held at 225 that, while Regalian had incurred expenses in obtaining and preparing for the expected contract, they had not rendered any benefit to LDDC which would support a claim for compensation. Doubts also exist as to whether any benefit was actually received by the defendant in William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932 (although see Rattee, J above, at 224), which is regarded by restitution lawyers as a leading case in favour of liability. Jones, G, ‘The law of restitution: the past and the future’, in Essays on the Law of Restitution (Oxford: Clarendon Press, 1991), ed AS Burrows, at 5 suggests that ‘it would perhaps have been wiser for the court to admit that it was awarding damages to reimburse the plaintiff for the money he had spent at the defendant's request’.Google Scholar

¹⁸ See Birks, P, An Introduction to the Law of Restitution (Oxford: Clarendon Press, 1989), at 115; Ball loc cit, n 15, at 575 and McKendrick, loc cit, n 15.Google Scholar

¹⁹ See Burrows, AS and McKendrick, E, Cases and Materials on the Law of Restitution (Oxford: Oxford University Press, 1997);Google ScholarBurrows, AS (1988) 104 LQR 576;Google ScholarVirgo, G, The Principles of the Law of Restitution (Oxford: Oxford University Press, 1999), at 361.Google Scholar

²⁰ See Giliker, , Pre-contractual liability in English and French Law, op cit, at 87–9.Google Scholar

²¹ Jones, G, Goff and Jones: The Law of Restitution, 5th edn (London: Sweet & Maxwell, 1998), at 668 (my italics), although in the most recent edition (6th edn, 2002) at 26-008 and 26-009), he acknowledges arguments in favour of free acceptance.Google Scholar

²² Ultramares Corp v Touche 255 NY Rep 170, 179 (1931); 174 NE Rep 441, 444 (1931) per Cardozo, CJ.Google Scholar

²³ Markesinis, BS and Deakin, SF, Tort Law, 4th edn (Oxford: Clarendon Press, 1999), at 466.Google ScholarSee, generally, Carty, H, An Analysis of Economic Torts (Oxford: Oxford University Press, 2001),Google ScholarClerk & Lindsell on Torts 18th edn (London: Sweet & Maxwell, 2000), ch 24 andGoogle ScholarHeydon, JD's classic, Economic Torts, 2nd edn (London: Sweet & Maxwell, 1978).Google Scholar

²⁴ See Clerk & Lindsell on Torts, op cit, para 24.01. Carty, op cit, at 2–4 prefers the term ‘;general economic torts’ as distinct from ‘misrepresentation torts’ such as deceit, malicious falsehood and passing off.Google Scholar

²⁵ Identified, generally, as consisting of all common law crimes and torts, although breach of contract and breach of regulatory statutes have proved more controversial: see Clerk & Lindsell, op cit, which notes at 24–34 that the definition may differ according to the different torts.Google Scholar

²⁶ See Carty, , op cit, ch 5, ‘Intentional violation of economic interests: The limits of common law liability’ (1988) 104 LQR 250 andGoogle Scholar‘Unlawful interference with trade’ (1983) 3 LS 193;Google ScholarWeir, T, ‘Chaos or cosmos? Rookes, Stratford and the Economic Torts’ [1964’ CLJ 225 andCrossRefGoogle ScholarEconomic Torts (Oxford: Clarendon Press, 1997);Google ScholarFridman, GHL, ‘Interference with Trade or Business’ (1993) 1 Tort L Rev 19, 99;Google ScholarTorquay Hotel Co Ltd v Cousins [1969] 2 Ch 106 at 139 per Lord Denning; Merkur Island Shipping Corpn v Laughton [1983] 2 AC 570, 609–10 per Lord Diplock; Lonrho pic v Fayed [1990] 2 QB 479.Google Scholar

²⁷ See Mogul Steamship Company Ltd v McGregor, Gow & Co [1892] AC 25; Allen v Flood [1989] AC 1, which have been said to ensure ‘some elbow-room for the aggressive pursuit of selfinterest in a society dedicated to free enterprise’: Fleming, JG, The Law of Torts (LBC Information Services, 1998). Although conspiracy to injure does not require unlawful means, it is likely that the parties would be able to justify their conduct in that they were acting legitimately to advance their own self-interests (the claimant would also have to prove the concerted action of two or more parties; one party will not suffice): see Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC 435.Google Scholar

²⁸ Cane, P, Tort Law and Economic Interests, 2nd edn (Oxford: Clarendon Press, 1996), at 155.Google Scholar

²⁹ Murphy v Brentwood District Council [1991] 1 AC 398, overturning Anns v Merton LBC [1978] AC 728: ‘[Pure economic loss] is not recoverable in tort in the absence of a special relationship of proximity imposing on the tortfeasor a duty of care to safeguard the plaintiff from economic loss’, per Lord Bridge at 475.Google Scholar

³⁰ See Hedley Byrne v Heller and Partners [1964] AC 465; Henderson v Merrett Syndicates Ltd [1995] 2 AC 145; Spring v Guardian Assurance plc [1994] 2 AC 296; Williams v Natural Life Health Foods Limited [1998] 1 WLR 830. This is, of course, inapplicable in this context in that the complaint does not relate to the defective performance of services, but the fact that services performed were not paid for.Google Scholar

³¹ Bisset v Wilkinson [1927] AC 177.Google Scholar

³² See Treitel, op cit at 306; Anson's Law of Contract, op cit, at 237–40.Google Scholar

³³ See Maddison v Addison (1883) 8 App Cas 467.Google Scholar

³⁴ Edgington v Fitzmaurice (1885) 29 Ch D 459 (a prospectus which falsely stated the objectives of the company's rights issue was held to have made a representation of fact—the fact in question being the state of mind of the directors when issuing the document). This does not of course prevent a defendant from subsequently changing his or her mind!Google Scholar

³⁵ See Esso Petroleum Co Ltd v Mardon [1976] QB 801 and Smith v Land and House Property Corpn (1884) 28 Ch D 7.Google Scholar

³⁶ Edgington v Fitzmaurice (1885) 29 Ch D 459.Google Scholar

³⁷ Derry v Peek (1889) 14 App Cas 337, 374 per Lord Herschell. Recklessness is deemed to go beyond mere carelessness: Thomas Witter Ltd v TBP Industries Ltd [1996] 2 All ER 573, 587; Derry v Peek above at 373.Google Scholar

³⁸ Downs v Chappell [1997[ 1 WLR 426, CA.Google Scholar

³⁹ See Polhill v Walter (1932) 3 B & Ad 114, 110 ER 43; Standard Chartered Bank v Pakistan National Shipping Corp [1995] 2 Lloyd's Rep 365, 373; Armitage v Nurse [1998] Ch 241, 251 per Millett LJ.Google Scholar

⁴⁰ Nevertheless, the court in Richardson v Sylvester (1873) LR 9 QB 34 held that the plaintiff did have a cause of action in deceit where he had been encouraged by the defendant's advertisement for the letting of a farm to incur expenses inspecting and valuing the premises only to find that the defendant had no power to let the premises and had ulterior motives for placing the advert. The tort also possesses a very generous test of remoteness (Doyle v Olby Ltd [1969] 2 QB 158, at 167).Google Scholar

⁴¹ See Hedley Byrne v Heller and Partners [1964] AC 465; Henderson v Merrett Syndicates Ltd [1995] 2 AC 145. In the absence of a contract, the Misrepresentation Act 1967 is clearly inapplicable: see s 2.Google Scholar

⁴² [1976] QB 801.Google Scholar

⁴³ [1979] 2 Lloyd's Rep 391; [1981] 1 Lloyd's Rep 434 (CA: appeal on costs).Google Scholar

⁴⁴ Ibid, at 399.

⁴⁵ A search of Lexis in July 2003 revealed that Box had been cited in only one reported case (Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd (Hong Kong CA [1984] 1 Lloyd's Rep 555) and a number of unreported decisions (Stevens v Barclays Mercantile Business Finance Ltd (Ch Div, 31 July 1997), Bankers Trust International PLC v PT Dharmala Sakti Sejahtera (QB (Commercial Court), 1 Dec 1995), Coote v Barclays Bank Plc (CA, 13 Oct 1993), and Security Plan Investments v Cornhill Insurance plc (QBD, 12 July 1992)). In all these decisions, it was raised in passing to indicate that a bank could be found to owe a duty of care to its customer, or to establish the nature of a pre-contractual representation.Google Scholar

⁴⁶ [1978] AC 728.Google Scholar

⁴⁷ [1991] 1 AC 398, overturning Anns v Merton LBC above.Google Scholar

⁴⁸ Above, at 399.Google Scholar

⁴⁹ Markesinis and Deakin, op cit at 93, citing in support the judgment of Glidewell LJ in GlenMor Fashions Ltd v Jaeger Company Shops Ltd (CA) 20 Nov 1991 (unreported).Google Scholar

⁵⁰ See Walford v Miles [1992] 2 AC 128 which accepts unquestioningly the adversarial nature of the negotiation process. For challenges to this view, see below.Google Scholar

⁵¹ Interfoto Library Ltd v Stilletto Ltd [1989] 1 QB 433, 439 per Bingham, LJ, who famously contrasts the ad hoc approach of the English courts with the more principled position of civil law to the making and carrying out of contracts.Google Scholar

⁵² See Cass com 20 Mar 1972 JCP 1973 I I 17543, note Schmidt, J. It should be noted that by the end of the nineteenth century, French law had come to accept that some form of liability should be imposed during the negotiation process, although strong disagreement existed as to its form and content: see, eg, Saleilles, R ‘De la responsabilité précontractuellé’ RTDC 1907 696. One of the most influential of the early writers was the German jurist, Rudolph von Jhering: ‘Culpa in Contrahendo’ (1861) 4 Iherings Jahrb, cher 1, translated into French in 1893: ‘De la culpa in contrahendo ou des dommages-intérêts dans les conventions nulles ou restées imparfaites’ Oeuvres choisies, trans O de Meulenaere (Paris, Marescq, 1893) tII, pl-100).Google Scholar

⁵³ ‘Tout fait quelconque de l'homme, qui cause à autrui un dommage, oblige celui par la faute duquel il est arrivé a le réparer’.Google Scholar

⁵⁴ Although Art 1382 does not define ‘fault’, it is generally regarded as conduct below the standard of the reasonable man (un homme normalement avisé) in the same situation as the defendant.Google Scholar

⁵⁵ ‘Chacun est responsible du dommage qu'il a causé non seulement par son fait, mais encore par sa négligence ou par son imprudence.’Google Scholar

⁵⁶ Starck, B, Roland, H, and Boyer, L, Obligations: Responsabilité délictuelle (Litec, 1996) 5e éd, Nos 190–191; Terré, F, Simler, P and Lequette, Y, Droit Civil, Les Obligations (Dalloz, 1999) 7e éd, No 666; , HL and Mazeaud, J et Chabas, F, Leçons de droit civil (Montchestien, 1998) 9e éd, tome II, No 406.Google Scholar

⁵⁷ For comparative studies of pure economic loss, see Van Dunne, JM, ‘Liability for Pure Economic Loss: Rule or Exception?’ (1999) 7 ERPL 397;Google ScholarCivil Liability for Pure Economic Loss (Kluwer, 1996), ed Banakas, EK;Google Scholarvan Gerven, W, Lever, J and Larouche, P, Tort Law (Oxford: Hart Publishing, 2000) 2.4, BS Markesinis ‘La politique jurisprudentielle et la réparation du préjudice économique en Angleterre: Une approche comparative’ [1983] RIDC 31 and Pure Economic Loss in Europe (Cambridge: Cambridge University Press, forthcoming 2003), ed. Bussani, M and Palmer, VV. More generally, see von Bar's, C interesting attempt to explore common elements of tort law in EU states in The Common European Law of Torts (Oxford: Oxford University Press, 2000), vol 2, part 1.Google Scholar

⁵⁸ See C Lapoyade Deschamps in Civil Liability for Pure Economic Loss (Kluwer, 1996), ed Banakas, EK at 89, who comments that the terms ‘perte financiére’, ‘manque à gagner’, and ‘perte de profit ou de bénéfices’ are used interchangeably. Jutras, D, ‘Civil law and pure economic loss: What are we missing?’ (1986–1987) 12 Can Bus LJ 295, 310 notes that ‘While civilian authors have devoted much energy discussing the foundation of delictual responsibility, there is very little scholarship on the development of a coherent theory of protected interests.’ This is in obvious contrast to German law, see The German Civil Code: Bürgerliches Gesetzbuch (BGB) § 823 I [Deliktischer Schadensersatzanspruch].Google Scholar

⁵⁹ Equally, prior to contract, the rule of non-cumul will not obstruct claims in delict.Google Scholar

⁶⁰ See Chauvel, P, ‘Rupture des pourparlers et responsabilité délictuelle’ Dr et Patr 1996 no 43, 36;Google ScholarMazeaud, D ‘La genèse des contrats, un régime de liberté surveillée’ Dr et Patr 1996, no 40, 44 who declares that negotiations are no longer a ‘no-man's land juridique‘;Google ScholarMousseron, P, ‘Conduite des négotiations contractuelles et responsabilité délictuellé’ RTDCom 1998 243.Google Scholar

⁶¹ Cass com 20 Mar 1972 JCP 1973II17543, note Schmidt, J, Bull civ IV No 93, at 90 (Gerteis c/Vilbert-Lourmat) and it is cited as such in the recent study of Beale et al, Contract Law op cit 2.F.77, 256–7. Comment G Durry RTDC 1972. 779. B Nicholas, The French Law of Contract, 2nd edn (Oxford: Clarendon Press, 1992), 70–1 notes that, on similar facts, an English court would shrink from intervention.Google Scholar

⁶² (StéLaboratoires Sandoz c/ Sté Poleval) Com 7 Apr 1998 D 1999.514, note Chauvel, P, JCP 1998 E Jur 579, note Schmidt-Szalewski, J. Note the Court of Appeal on the same facts found contractual liability: see Versailles 21 Sept 1995 RJDA 1996/2 No 178, RTDC 1996.145 obs Mestre, J.Google Scholar

⁶³ In contrast, where the negotiations are not advanced, there is no such requirement: Cass com 12 Jan 1999 Dr et patr 1999 chron No 2375, note Chauvel, P; Mousseron, P ‘L'avant-contrat’ JCP 1999 E No 44, 4–5.Google Scholar

⁶⁴ Cass com 4 Apr 1995 Lexilaser No 749.Google Scholar

⁶⁵ eg in Orléans, 19 Oct 2000 JCP 2001 IV 2003 negotiations broke down after one party had publicly accused the other of falsifying accounts and threatened criminal proceedings. The Court of Appeal found that such a loss of confidence was a good reason for the breakdown of negotiations.Google Scholar

⁶⁶ Schmidt-Szalewski, in her note does suggest, however, that the court was influenced by the fact that a small French company (Poleval) had been negotiating with a large multi-national.Google Scholar

⁶⁷ (My translation). Riom 10 June 1992 RJDA 1992 No 893, 732, RTDC 1993.343 obs Mestre, J (SA Auto 26 c/SA Rover-France)—appeal rejected: Cass com 11 Oct 1994 Lexilaser, No 1763.Google Scholar

⁶⁸ As seen in Cass civ 6 Jan 1998 JCP 1998 II 10066 note B Fagès, Déf 1998.743 obs D Mazeaud (Ossona c/ Al Esayi) where the court was prepared to find delictual liability despite the fact that a mere 24 days has passed since the commencement of negotiations due to the advanced stage of negotiations, the large sums involved and, in the view of Fagàs, the bad faith evident in the defendant's conduct.Google Scholar

⁶⁹ See Cass com 7.1 and 22 Apr 1997 D 1998.45, note P Chauvel, RTDC 1997.651 obs Mestre, J, and, generally, Fraimout, J ‘Le droit de rompre des pourparlers avancés’ Gaz Pal 1 June 2000. For a discussion of the theoretical basis of liability, see Giliker, op cit, 130–2.Google Scholar

⁷⁰ Cass civ 6 Jan 1998 JCP 1998 II10066, note Fages, B. See also Rennes 8 July 1929 DH 1929 548 (encouraging clerk to believe practice would be transferred to him); Civ 3 Oct 1972 Bull civ III No 491 (supermarket company requested owner of land to do work on property but subsequently withdrew from negotiations). Le Tourneau has suggested that this indicates a need for transparency in the negotiation process: ‘La rupture des negotiations’ RTDCom 1998.479,484.Google Scholar

⁷¹ This is a preliminary contract by which the vendor commits himself or herself to sell to the buyer. The buyer is not obliged to purchase, but risks losing any sum paid at the time of the agreement (usually 5–10 per cent of the total purchase price) if he or she refuses to sign the final contract without a good reason.Google Scholar

⁷² Cass com 22 Feb 1994 Bull civ IV No 72, 55, RTDC 1994.850 obs Mestre, J.Google Scholar

⁷³ Cass com 7 Mar 1972 Bull civ IV No 83. Comment Durry, G RTDC 1972.779 and Morin, G ‘Le devoir de coopération dans les contrats internationaux: Droit et pratique’ (1980) 6 DPCI 9.Google Scholar

⁷⁴ See Seager v Copydex [1967] 1 WLR 923 where Lord Denning held at 931 that ‘It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it.’ See also AG v Guardian Newspapers Ltd (No 2) [1990] AC 109, 280–3 per Lord Goff.Google ScholarGenerally, Halsbury's Laws of England, (London: Butterworths, 1996 and 2002 update), vol 8 (1), no 480–97.Google Scholar

⁷⁵ Cass com 3 Oct 1978 D 1980. 55, note J Schmidt; Com 29 Nov 1960 Gaz Pal 1961.1.152. Comment J Huet ‘Violation de la confidentialité des négotiations’ Pet Aff 4 Apr 1990 and Forbin, G ‘How is confidential information to be managed during pre-contractual negotiations?’ [1998] RDAI/IBLJ 477Google Scholar

⁷⁶ Cass com 3 Oct 1978 D 1980. 55, note J Schmidt; Paris 4 June 1992 RDPI 1993/49.68.Google Scholar

⁷⁷ See, eg, Cass com 15 Dec 1992 RJDA 1993, No 296, 260, RTDC 1993.577 obs Mestre, J; Versailles 5 May 1992 Bull Joly 1992. 636, note J Schmidt, RTDC 1992.752 obs Mestre, J; Bordeaux 11 June 1997 JCP E 1997 1 617 obs Mousseron, P. Contra,Google ScholarFontaine, M ‘Les lettres d'intention dans la negotiation des contrats internationaux’ (1977) 3 DPCI 73 p 108.Google Scholar

⁷⁸ eg, by accepting an obligation d'exclusivité (to negotiate only with the other party) or an obligation de sincérité (to inform the other party of any parallel negotiations).Google Scholar

⁷⁹ Cass civ 4 June 1997 RTDC 1997.921.Google Scholar

⁸⁰ Mousseron, JM, Technique contractuelle, 2nd edn (Lefebvre, 1999), at 50.Google Scholar

⁸¹ Pau 14 Jan 1969 D 1969. 716;Google ScholarDurry, G RTDC 1970. 358. See also Com 10 June 1986 Bull civ IV No 123, 104, RTDCom 1987. 570 obs Hémard, J et B Bouloc; Com 15 Feb 1965 Bull civ III No 123, 105. This case also highlights the reluctance of the courts to impose liability between two commercial parties due to their appreciation of the risks involved.Google Scholar

⁸² See n 72.Google Scholar

⁸³ Kahn-Freud, O ‘On Uses and Misuses of Comparative Law’ (1974) 37 MLR 1 at 27.Google Scholar

⁸⁴ See Feldthusen, B ‘The recovery of pure economic loss in Canada: Proximity, justice, rationality and chaos’ (1996) 24 Manitoba LJ 1Google Scholarand ‘Pure economic loss in Canada’, in Civil Liability for Pure Economic Loss (Kluwer, 1996), ed Banakas, EK, 131:Google Scholar ‘I doubt whether there exists another sovereign jurisdiction whose lower courts have so frequently discredited or ignored decisions of their own appellate courts and turned instead to those of a foreign country.’ See also McCormick, P, Supreme at Last: The Evolution of the Supreme Court of Canada (Toronto: James Lorimer, 2000).Google Scholar

⁸⁵ See <http://www.scc-csc.gc.ca/aboutcourt/system>, Gall, GL, The Canadian Legal System 4th edn (Carswell, 1995), 223.Google Scholar

⁸⁶ Canadian National Railway Co v Norsk Pacific Steamship Co [1992] 91 DLR (4th) 289 (concerning contractual relational economic loss).Google Scholar

⁸⁷ Above, at 363–5.Google Scholar

⁸⁸ Above, at 319–25.Google Scholar

⁸⁹ See also Stevenson J, ibid at 384: ‘The case at bar is a good example of how useful comparative law can be’ and the comments of Markesinis (1993) 109 LQR 5 at 11. It would seem that their conflicting views have, to some extent, been reconciled in the subsequent Supreme Court decision in Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd (1998) 153 DLR (4th) 385. Comment I Duncan Wallace QC ‘Contractual relational loss in Canada‘ (1998) 104 LQR 370.

⁹⁰ See, eg, The Norsk, above in which Justices McLachlin and La Forest engage in an overt policy debate. For a critical discussion of the economic analysis used by the court, see Cohen, D ‘The economics of Canadian National Railway v Norsk Pacific Steamship’ (1995) UTLJ 143CrossRefGoogle Scholarand Siebrasse, N ‘Economic analysis of economic loss in the Supreme Court of Canada’ (1994) 20 Queen's LJ 1,Google Scholar who both favour the dissenting judgment of La Forest J. Contrast Feldthusen, B and Palmer, J ‘Economic loss and the Supreme Court of Canada: An economic critique of Norsk Steamship and Bird Construction’ (1995) 74 Can Bar Rev 427, who argue that whilst the judgment of La Forest J is a step in the right direction, there are other economic considerations which preclude recovery.Google Scholar

⁹¹ I am grateful to Macmillan, Catherine for her suggestion that the greater emphasis on policy by the Supreme Court of Canada may derive from the academic background of the judiciary in contrast to the background of the English judiciary, which is, with a few notable exceptions, practice-based. Chief Justice McLachlin, for example, was formerly a professor of law at the University of British Columbia, while Justice La Forest was Dean of the University of Alberta Law School and a member of the Law Reform Commission of Canada prior to his appointment to the New Brunswick Court of Appeal in 1981.Google Scholar

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⁹³ [1978] AC 728.Google Scholar

⁹⁴ (1984) 10 DLR (4th) 641, Wilson, J restating the Lord Wilberforce test. Comment Irvine, J ‘Kamloops v Nielsen’ (1984) 29 CCLT 185;Google ScholarFeldthusen, B ‘City of Kamloops v Nielsen: A comment on the Supreme Court's modest clarification of colonial tort law’ (1985) 30 McGill LJ 539. Applied in BDC Ltd v Hofstrand Farms Ltd (1986) 26 DLR (4th) 1;Google ScholarRothfield v Manolakos (1990) 63 DLR (4th) 449;Google ScholarCanadian National Railway Co v Norsk Pacific SS Co (1992) 91 DLR (4th) 289; London Drugs Ltd v Kuehne & Nagel International Ltd (1992) 97 DLR (4th) 261; Winnipeg Condominium Corp No 36 v Bird Construction Co (1995) 121 DLR (4th) 193; D'Amato v Badger (1996) 137 DLR (4th) 129;Hercules Managements Ltd v Ernst & Young (1997) 146 DLR (4th) 577; Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd (1998) 153 DLR (4th) 385.Google Scholar

⁹⁵ [1991] 1 AC 398.Google Scholar

⁹⁶ [1992] 91 DLR (4th) 289. Comment Fleming, JG ‘Economic loss in Canada’ (1993) 1 Tort L Rev 68;Google ScholarMarkesinis, BS ‘Compensation for negligently inflicted pure economic loss: Some Canadian views’ (1993) 109 LQR 5;Google ScholarMclnnes, M ‘Contractual relational economic loss’ (1993) 52 CLJ 12;CrossRefGoogle ScholarRafferty, N ‘Tortious liability for purely economic loss’ (1993) 9 PN 87.Google Scholar

⁹⁷ Above, at 371. See also above, at 365: ‘[Canadian courts] will refuse to accept injustice merely for the sake of the doctrinal tidiness which is the motivating spirit of Murphy.’Google Scholar

⁹⁸ Above, at 303.Google Scholar

⁹⁹ (1997) 146 DLR (4th) 577. Comment Deturbide, ME (1998) 77 Can Bar Rev 260 (auditors not liable to shareholders under stage 2 [policy reasons] in that liability where the statement is used for a purpose or transaction other than that for which prepared could lead to indeterminate liability). One may nevertheless question whether, despite the different tests utilised by the courts, the similar results reached suggests that the tests are closer than they first appear. This is supported by the recent decision of the Supreme Court in Cooper v Hobart (2002) 206 DLR (4th) 193.Google Scholar

¹⁰⁰ [1990] 2 AC 605.Google Scholar

¹⁰¹ (Toronto: Carswell, 2000) 4th edn This work sets out the five categories of economic loss cases, first put forward in (1990–1991) 17 Can Bus LJ 356, and adopted by La, Forest J in The Norsk above, at 299–300, namely the independent liability of statutory public authorities, negligent misrepresentation, negligent performance of a service, negligent supply of shoddy goods or structures and relational economic loss.Google ScholarSee also Linden, AM, Canadian Tort Law, 6th edn (Toronto: Butterworths, 1997), at 405–6.Google Scholar

¹⁰² (2001) 193 DLR (4th) 1 Comment IN Duncan-Wallace, QC ‘Tender call obligations in Canada’ (2001) 117 LQR 351;Google ScholarRafferty, N ‘Tortious and contractual liability arising out of precontractual negotiations and the tendering process’ (2001) 17 PN 179. This decision has since been relied upon by a number of lower court decisions, most notably in Minardi v Clearly Canadian Corpn [2001] BCSC 108 (no pre-contractual liability in tort in absence of negligent misrepresentation).Google ScholarSee also Gross v Great-West Life Assurance Company [2002] ABCA 37; Anderson v Brouwer Claims Canada & Co Ltd [2002] BCSC 1043; 978011 Ontario Ltd v Cornell Engineering Company Ltd (2001) 53 OR (3d) 783 (Ont CA).Google Scholar

¹⁰³ Above, at 19.Google Scholar

¹⁰⁴ (1998) 163 DLR (4th) 504, 513, applying the Anns two stage test. The trial judge had equally found a duty of care, but that the plaintiffs had failed to prove causation.Google Scholar

¹⁰⁵ It should be noted that, on the facts, indeterminacy was not a problem. This will, of course, not always the case.Google Scholar

¹⁰⁶ Anns v Merton LBC [1978] AC 728, 751 per Lord Wilberforce.Google Scholar

¹⁰⁷ The full court consisted of McLachlin, Gonthier, Iacobucci, Major, Bastarache, Binnie, and Arbour JJ.Google Scholar

¹⁰⁸ Above, at 18–20.Google Scholar

¹⁰⁹ See Economic Negligence, 4th edn (Toronto: Carswell, 2000),Google Scholarwhich together with ‘Liability for economic loss: Yes, but why?’ (1999) 28 UW Aust L Rev 84Google Scholarand ‘Economic loss in the Supreme Court of Canada’ (1991) 17 Can Bus LJ 356, was cited expressly in Martel.Google Scholar

¹¹⁰ Above at 20.Google Scholar

¹¹¹ Note also LAC Minerals Ltd v Corona Resource Ltd (1989) 61 DLR(4th) 14 where the court intervened on the basis of breach of confidence to impose a constructive trust: see Hammond, G ‘Equity and abortive commercial transactions’ (1990) 106 LQR 207.Google Scholar

¹¹² Above, at 19–20. The Court additionally threw further doubt on the concept of a duty to bargain in good faith (at 21).Google Scholar

¹¹³ Note also the ‘landmark decision’ of Cooper v Hobart (2002) 206 DLR (4th) 193, which arguably reduces the differences between English and Canadian law. A recent commentator has suggested that Cooper ‘signals the end of the untrammelled expansion of negligence liability in the Canadian context’: Neyers, J ‘Distilling duty: the Supreme Court of Canada amends Anns’ (2002) 118 LQR 221.Google ScholarSee also Pitel, S ‘Negligence: Canada remakes the Anns test’ [2002] CLJ 252Google Scholarand Rafferty, N ‘The test for the imposition of a duty of care: Elucidation or obfuscation by the Supreme Court of Canada’ (2002) 18 PN 218.Google Scholar

¹¹⁴ Although the Canadian courts appear more willing to address these questions directly, note Denning, Lord MR in Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd [1973] QB 27, 36: ‘At bottom … the question of recovering economic loss is one of policy.’Google ScholarStapelton, J in ‘Duty of care and economic loss: A wider agenda’ (1991) 107 LQR 249 argues for the need to articulate clearly the policy basis for pure economic loss.Google Scholar

¹¹⁵ (Oxford: Hart Publishing, 1997), at 95.Google Scholar

¹¹⁶ [1959] 1 QB 426 at 433 per Diplock, J. This case raises the technical question whether unintentional trespass to the person exists as a cause of action in English law. It also highlights the continuing legacy of the old forms of actions on English tort law.Google Scholar

¹¹⁷ See Herbots, J ‘Le “duty of care” et le dommage purement financier en droit compare’ [1985] Rev dr int et dr comp 7, 8Google Scholarand Marshall, D ‘Liability for pure economic loss negligently caused—French and English law compared’ (1975) 24 ICLQ 748.CrossRefGoogle Scholar

¹¹⁸ Marshall, loc cit at 766.Google Scholar

¹¹⁹ Recent case-law indicates that the high point of Anns has passed in Canada. McLachlin J in The Norsk above was really highpoint of judicial flexibility and seems to have provoked a backlash and accusations that the law lacks certainty and predictability: see Cherniak, EA and How, E ‘Policy and predictability: Pure economic loss in the Supreme Court of Canada’ (1999) 31 Can Bus LJ 209, who note at 231, that: ‘Unfortunately, merging the ill-defined concept of policy with the indefinite notion of proximity has created profound uncertainty.’ See also Feldthusen (1999) loc cit at 100;Google ScholarHarrington, S ‘Claims in tort for pure economic loss: A comparative view from Canada’ [2000] IJIL 29.Google Scholar

¹²⁰ See Cane, P, ‘Tort law as regulation’ (2002) 31 Common Law World Review 305, 306, and id, The Anatomy of Tort Law (Oxford: Hart Publishing, 1997).Google Scholar

¹²¹ [1992] 2 AC 128.Google ScholarComment Neill, P ‘A key to lock-out agreements?’ (1992) 108 LQR 405;Google ScholarCumberbatch, J ‘In freedom's cause: the contract to negotiate’ (1992) 12 OJLS 586;CrossRefGoogle ScholarJamieson, B ‘When lock-out agreement enforceable’ [1992] LMCLQ 186;Google ScholarPeel, E ’Locking-out and locking-in: The enforceability of agreements to negotiate’ [1992] CLJ 211. Consider also the doctrines of caveat emptor (see, eg, Smith v Hughes (1871) LR 6 QB 597 and the classic case of Keates v Cadogan (1851) 10 CB 591) and non-disclosure.CrossRefGoogle Scholar

¹²² Note, for example, a number of English tort cases in which the court has refused to award compensation for pure economic loss on the basis that this is primarily a matter for contract law and that it is not for tort law to undermine the contractual regulation of risk: Simoon General Contracting Co v Pilkington Glass (No 2) [1988] QB 758; Pacific Associates Inc v Baxter [1990] 1 QB 993.Google Scholar

¹²³ See, eg, the work of Professor Schmidt-Szalewski who finds liability to rest on the principle of ‘confiance légitime trompée’: that is, liability will be imposed where the defendant has undermined a relationship of trust between the parties: Négotiation et conclusion de contrats (Dalloz, 1982) at Nos 207–33, ‘La sanction de la faute précontractuelle’ RTDC 1974.46 and ‘L a période precontractuelle en droit français’ RIDC 1990.545. The concept was first used by Emmanuel Lévy, see Les fondements du droit (F Alcan, 1933)Google Scholar

¹²⁴ See Kahn-Freud, O, Levy, C, and Rudden, B, A Sourcebook on French Law (Oxford: Oxford University Press, 1973), 286.Google Scholar

¹²⁵ See Bell, J, Boyron, S and Whittaker, S, Principles of French Law (Oxford: Oxford University Press, 1998) at 309.Google ScholarSee also Jamin, C ‘Une bréve histoire politique des interprétations de l' article 1134 du code civil’ D 2002.901 for the political background to the courts' interpretation of the Code civil.Google Scholar

¹²⁶ Cass com 22 Feb 1994 Bull civ IV N o 72, p55, RTDC 1994.850 obs Mestre, J.Google Scholar

¹²⁷ The period preceding the final contract, for a long time considered a period of absolute freedom of contract for the parties, thus becomes rather tricky in practice.Google Scholar

¹²⁸ (London: Butterworths, 1998) 3.6, although they deal solely with lawyer-based negotiations, citing studies by Menkel-Meadow, C ‘Lawyer negotiations: theories and realities—What we learn from mediation’ (1993) 56 MLR 361;CrossRefGoogle ScholarGenn, H, Hard Bargaining: Out of court Settlement in Personal Injury Actions (Oxford: Clarendon Press, 1987),Google Scholarand Condlin, R ‘“Cases on both sides”: Patterns of argument in legal-dispute negotiation’ (1985) 44 Maryland L Rev 65.Google ScholarSee also the classic empirical studies on contracting behaviour: Macaulay, S ‘Non-contractual relationships in business’ (1963) 28 Am Soc Rev 55;CrossRefGoogle ScholarBeale, H and Dugdale, T ‘Contracts between businessmen: planning and the use of contractual remedies’ (1975) 2 Brit J Law and Soc 45;CrossRefGoogle ScholarMacneil, I ‘Contracts: adjustment of long-term economic relations’ (1978) 72 Northwestern Univ LR 854Google Scholarand ‘Economic analysis of contractual relations’, in The Economic Approach to Law (London: Butterworths, 1981), ed Burrows, P and Veljanovski, CG.Google Scholar

¹²⁹ Chauvel, note to Com 7 Apr 1998 D 1999.514, 515.Google Scholar