1. In exceptional circumstances, a plaintiff may not have suffered any financial detriment as a result of relying on a precontractual arrangement but, none the less, a defendant may be held liable merely for having obtained an advantage as a result of the breach of a precontractual arrangement: see further below, s 4(b).

2. For convenience, I have continued to use the terms ‘plaintiff/s’ to refer to claimant/s throughout this article.

3. See eg Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428 at 429.

4. Turriff Construction Ltd v Regalia Knitting Mills Ltd [1972] 2 Lloyd's Rep 234 at 259.

5. In order for precontractual liability to arise, arguably the plaintiffs expectation need not necessarily be that the contract is an absolute certainty. See C F Cauchi ‘The Protection of the Reliance Interest and Anticipated Contracts Which Fail To Materialise’ (1981) 19 UWOLR 237, 268, formulating the requirement that there needs to be merely a ‘legitimate expectation’ of a contract.

6. Included herein is the situation where the parties have reached agreement on all essential matters but the parties still require that certain formal steps be taken before they are to be legally bound.

7. Eg Stinchcombe v Thomas [1957] VR 509. A recent example is Easar Antennas Ltd v Racal Defence Electronics Ltd (7 September 2000, unreported, HC, Hart J, http://www.law.cam.ac.uk/restitution/archive/englcases/easat.

8. See, however, further below, section 3(a).

9. It is possible to draw a distinction between incomplete contracts and defective contracts. A defective contract can be defined as one in which the parties have reached what is a complete and certain agreement, but they have failed to comply with a statutory or common law rule which renders ‘defective’ what would otherwise be an enforceable contract. Although some of the discussion herein applies equally to defective contracts (and, in any case, the distinction between incomplete and defective contracts can not be sharply drawn and a ‘contract’ may be ineffective on both grounds, as eg in Deacon v Adams (1982) 55 NSR (2d) 218), it must be noted that other considerations are relevant to determining liability under defective contracts, eg the policy of the statute rendering a contract unenforceable. See generally J Dietrich Restitution: A New Perspective (Sydney: Federation Press, 1998) ch 6, and specifically pp 107–122.

10. Cf McKendrick, E ‘Workdone in Anticipation of a Contract which does not Materialise’ in Cornish, W R, Nolan, R, O'Sullivan, J and Virgo, G (eds) Restitution: Past, Present & Future (Oxford: Hart Publishing, 1998) p 167.Google Scholar

11. E A Farnsworth ‘Precontractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiations’ (1987) 87 Col LR 217, 218–219. See also G Jones ‘Claims Arising Out of Anticipated Contracts Which Do Not Materialise’ (1980) 18 UWOLR 447, 448.

12. McKendrick, above n 10, p 163.

13. See eg Brewer St Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428 and generally J W Carter and M P Furmston ‘Good Faith and Fairness in the Negotiation of Contracts’ Parts I & II (1994) 8 JCL1; 93, 106–117.

14. See eg Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; MTA v Waverly Trunsit Pty Ltd [1991] VR 176 and generally Carter and Furmston, above n 13, pp 100–103. Cases of proprietary estoppel are also relevant. Many such cases involve either incomplete or defective contracts, often involving agreements which are less than fully formed because of the domestic context within which they are made. See eg Giumelli v Giumelli (1999)196 CLR 101.

15. See eg Banner Homes Group plc v Luff Developments Ltd [2000] 2 All ER 117, discussed further below, nn 69 and 76 and text to nn 101–103.

16. See eg Box v Midland Bank [1979] 2 Lloyd's Rep 391; Esso Petroleum Co Ltd v Mardon [1976] QB 801 and generally Carter and Furmston, above n13, pp 94–98.

17. Others see the issue in different terms, such as a ‘competition’ between restitution and estoppel. See eg Fung, D Y K Pre-contractual Liability Rights and Remedies: Restitution and Promissory Esroppel (Asia: Sweet & Maxwell, 1999)Google Scholar. Although estoppel is undoubtedly a significant mechanism for imposing liability in this context, it will be argued below that the principles underlying the imposition of liability via estoppel are derivative from principles of contract and tort law.

18. McKendrick, above n 10, p 164, and see also K Barker ‘Review’ (1999) 19 LS 415, 417 Contra Davis, D ‘Restitution and Equitable Wrongs: An Australian Analogue’ in Rose, F (ed) Consensus Ad Idem: Essays on the Law of Contract in Honour of Guenter Treitel (London: Sweet & Maxwell, 1996) p 176.Google Scholar

19. [1977] 2 NSWLR 880 at 900 Cf R M Goode ‘England Report’ in Formation of contracts and precontractual liability (International Chamber of Commerce, 1990) p 58.

20. See Goode, above n 19, pp 55–56 and E A Farnsworth ‘General Report’ in ibid, pp 22–25.

21. Such contracts will most likely be unenforceable under English law (see Walford v Miles [1992] 2 AC 128, though note the tort liability imposed in that case for misrepresentation, compensating the plaintiff's reliance loss), but likely be enforceable in Australia (see eg Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 21–27, per Kirby P), Canada, New Zealand and the United States. See generally Cohen, N ‘Pre-Contractual Duties: Two Freedoms and the Contract to Negotiate’ in Beatson, J & Friedmann, D (eds) Good Faith and Fault in Contract Law (Oxford: Clarendon Press, 1995)Google Scholar. In particular, Cohen emphasises the distinction between a process contract to negotiate in good faith and a ‘result-oriented’ contract to enter into a contract. As Cohen points out, giving certain content to the latter type of contract is much more difficult than to the former. See also J M Paterson ‘The Contract to Negotiate in Good Faith: Recognition and Enforcement’ (1996)10 JCL 120, and A F Mason ‘Contract, Good Faith and Equitable Standards in Fair Dealing’ (2000) 116 LQR 66. 80–81.

22. See eg Hughes Aircraft Systems International v Airservices Australia (1997)146 ALR 1 at 36–37, per Finn J; Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91; and Alcatel Australia Ltd v Scarcella & Others (1998) 44 NSWLR 349; but contrast Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 117 ALR 393 at 406, per Gummow J.

23. Cohen, above n 21, pp 41–42, however, considers that developments in the United States in the law of promissory estoppel have ‘opened an avenue for recognition of a non-contractual promise to negotiate in good faith’, and that United States law is thus ‘on the verge of recognising an explicit duty to act in good faith in negotiations’.

24. See Farnsworth, above n 20, p 21, Mason, above n 21, pp 69 and 77ff and Carter and Furmston, above n 13. See, however, Livingstone v Roskilly [1992] 3 NZLR 230 at 237, per Thomas J.

25. See McKendrick, above n 10, p 167.

26. The reason for the failure of the contract negotiations is of importance because precontractual liability will depend on the nature and extent of the risk assumed by, or imposed by law upon, each patty. See further below.

27. [1977] 2 NSWLR 880 at 901 Substantial work or detriment carried out in circumstances such as these must be contrasted with the type of work a plaintiff may ‘be expected to do without charge when tendering’: William Lacey (Hounslow) Ltd v Davis [1957] 2 All ER 712 at 716.

28. Cohen, above n 21, p 32.

29. The remedial consequences which flow from the use of these different doctrinal mechanisms may differ, but see further below.

30. Above n 10.

31. S Hedley ‘Work done in Anticipation of a Contract which does not Materialise: A Response’ in W R Cornish, R Nolan, J O'Sullivan and G Virgo (eds) Restitution: Past, Present & Future (Oxford: Hart Publishing, 1998) p 195.

32. [1979] 1 WLR 401, [1979] 1 All ER 965.

33. Cf the approach of Lord Denning in that case. See also Sir Anthony Mason and S J Gageler ‘The Contract’ in P D Finn (ed) Essays on Contract (Sydney: Law Book Co, 1987) p 11, for other possible solutions.

34. See eg Carter and Harland, above n 7, pp 78–84, and S N Ball ‘Work Camed out in Pursuance of Letters of Intent - Contract or Restitution?’ (1983) 99 LQR 572, 584, who has described this as the ‘realistic ability to construct a reasonable contract from the bare bones of agreement’. Carter and Furmston, above n 13, p 12, consider that a ‘generous approach of the courts [to implying terms] is essential today’. Note, however, the unwillingness of the House of Lords in Walford v Miles [1992] 2 AC128, to ‘fill in’ the incomplete ‘lockout’ agreement in that case, and instead to treat it as uncertain; for criticisms, see eg Paterson, above n 21, and R P Buckley ‘Walford v Miles: False Certainty About Uncertainty - An Australian Perspective’ (1993) 6 JCL 58. We are concerned here with contracts other than for the sale of goods, in relation to which a term as to reasonable price, in the absence of agreement, is implied by various Sale of Goods legislation.

35. See eg Way v Latilla [1957] 3 All ER 759, in which the House of Lords considered the parties' previous negotiations in implying what was a reasonable price payable for the services rendered. See discussion in Dietrich, above n 9, pp 132–133, and also Hedley, above n 31, p196.

36. [1954] 1 QB 428. See also Turiff Constructions Ltd v Regalia Knitting Mills Ltd [1972] 2 Lloyd's Rep 234, and cf Blackpool and Fylds Aero Club Ltd v Blackpool BC [1990] 1 WLR 1195.

37. Hedley, above n 31, p195.

38. See eg McKendrick, above n 10. For references to other critics and criticisms and for a more detailed discussion of the relative merits of contract and unjust enrichment in this context, see Dietrich, above n 9, pp 128–133.

39. Hedley, above n 31, p197.

40. Of course, restitution clearly has a role to play where a plaintiff transfers money in anticipation of acontract which does not eventuate. Such money (or it equivalent value) may be readily returnable should the contract not eventuate, subject perhaps, to any change of position defence operating to limit a defendant's liability to the enrichment surviving in his or her hands. (It is questionable, however, whether such a change of position defence necessarily ought to be available in the context of precontractual transfers of money: see Dietrich, above n 9, pp 133–135.) The cases under consideration here, however, involve the performance of services, the incursion of expenses, and other detrimental reliance on the part of a plaintiff. Services need not even have been conferred upon defendants or, if they have, need not be unequivocally enriching. It is in the context of liability for services generally that unjust enrichment theory faces particular difficulties as an explanatory concept. For an excellent summary of some of the difficulties, see S Hedley ‘Restitution: Contract's Twin?’ in F Rose (ed) Failure of Contracts: contractual, restitutionary and proprietary consequences (Oxford: Hart Publishing, 1997) particularly pp 266–273, and see further below.

41. For a detailed discussion, see Dietrich, above n 9, pp 50–77.

42. It should be noted that in many of the cases under consideration, there exists no such tangible benefit, the plaintiff's efforts having been wasted, for example, as a result of the failure to finalise a contract. Further, even if such a benefit exists, it is not necessarily the appropriate measure of any liability. Instead, compensation of reliance loss ought to be the minimum measure of remedial relief where the elements of precontractual liability (considered below) are satisfied. Consider, however, Van den Berg v Giles [1979] 1 NZLR II1, in which the remedy granted was restitution of the benefit conferred; it is suggested that this was not the appropriate measure of relief in the circumstances.

43. Cf McKendrick, above n 10, pp 175–177, and A Burrows Law of Restitution (London: Butterworths, 1993) pp 14–15.

44. For a comprehensive list of different suggested tests of enrichment, see Hedley, above n 40, p 267 and references cited therein.

45. See eg criticism by A S Burrows ‘Free Acceptance and the Law of Restitution’ (1988) 104 LQR 376; and M Garner ‘The Role of Subjective Benefit in the Law of Unjust Enrichment’ (1990) 10 OJLS 42.

46. It should be added that even if one accepts such subjective tests of enrichment as having explanatory value, some cases imposing precontractual liability, ostensibly in restitution or quasi-contract, cannot be said to involve any benefit to defendants in any form. See further below, n 74.

47. For more detailed discussion of the valuation of quantum meruit, see E McKendrick ‘The Battle of The Forms and The Law of Restitution’ (1988) 8 OJLS 197, 218.

48. [1937] 3 All ER 759. Although the decision in Way v Latilla has been described by Birks as ‘entirely satisfactory’, he considers the contractual reasoning utilised to achieve it as ‘artificial’: Introduction to the Law of Restitution (Oxford: Clarendon Press, 1985) p

272. With respect, it is difficult to see how the House of Lords could have reached the result it did without such contractual reasoning. See Dietrich, above n 9, pp 132–133. For cases in quasi-contract/restitution making reference to parties’ agreements to determine reasonable value, see eg Scarisbrick v Parkinson (1869) 20 LTR 175 and Ward v Grifiths (1928) 28 SR (NSW) 325.

49. Cf McKendrick, above n10, p 181.

50. Birks, above n 48, p 265. Cf Bronner v First Artists’ Munczgernenr Pty Ltd [1993] 2 VR 221 at 260.

51. Or else it adds a further, unnecessary stage of reasoning. Consider eg McKendrick, above n 10, p 181, who suggests that free acceptance justifies restitution where there is some ‘initial unconscionability’, such as where a defendant had no actual intention to pay. If, however, a defendant requests work intending to pay for it, but subsequently changes his or her mind, then according to McKendrick, ‘it is not easy to see why the terms of the initial request should give rise to a claim for payment. The request, when made, did not generate a restitutionary obligation to pay for the work done because the parties at this stage believed that payment would be made through the completion of the contract.’ Surely, the answer is obvious: the defendant should pay because he or she requested work intending that it be remunerated in some way.

52. See McKendrick, above n 10, p 182. The other hurdle to the application of ‘failure of consideration’ as an unjust factor is the ‘traditional’ requirement that such failure needs to be total; there are strong indications, however, that this requirement will be abrogated by the courts.

53. McKendrick, above n 10, p 183.

54. Eg Attorney General v Humphreys Estate (Queens Gardens) Ltd [1987] 1 AC 114.

55. McKendrick, above n 10, p 182.

56. Ibid.

57. See text to n 39 above.

58. Hedley, above n 31, p 197.

59. Hedley, above n 31, p 197, and cf Hedley, above n 40, pp 271–272.

60. See Ball, above n 34, p 577, Farnsworth, above n 11, p 220.

61. McKendrick, above n 10, p 173.

62. See eg Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

63. Eg William Lacey (Hounslow) Ltd v Davis [1957] 2 All ER 712; and Sabemo Pty Ltd v North Sydney MC [1977] 2 NSWLR 880.

64. [1977] 3 WWR 69.

65. Eg Attorney General v Humphreys Estate (Queens Gardens) Ltd [1987] 1 AC 114.

66. Cf Austotel Pry Ltd v Franklin Selfserve Pty Ltd (1989) 16 NSWLR 582.

67. It is suggested, however, that an agreement to pay for preliminary work will be enforced if such an ancillary agreement is intended to operate irrespective of whether a final contract is ultimately completed. Cf Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428 at 433, per Somervell LJ, in which case both parties knew that either could resile from the contract negotiations, but the defendant's express undertaking of responsibility for preliminary work carried out by the plaintiff was held to be enforceable.

68. See Avondale Printers Stationers Ltd v Haggie [1979] 2 NZLR 124.

69. See eg Banner Homes Group plc v Luff Developments Ltd [2000] 2 All ER 117, in which the appellant, on the faith of aprecontractual, ‘informal’ arrangement with the first respondent to purchase a valuable commercial site as joint venturers, had treated the site as ‘out of play’, that is, did not consider the site as a potential acquisition for its own portfolio. Further, on the assurances of the first respondent that the parties would enter a contract governing their joint venture as soon as the first respondent's solicitor returned from holidays, the appellant allowed the second respondent (a wholly owned subsidiary of the first respondent) to exchange contracts with the vendors of the site even though no formal written agreement between the appellant and first respondent had been entered into. See also below n 76 and text to nn 101–103.

70. Eg Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428 at 429; Angelopoulos v Sabitino (1995) 65 SASR 1.

71. See eg Estok v Heguy (1963) 40 DLR (2d) 88; T & E Developments v Hoornaert (1977) 78 DLR (3d) 606; Lexane Pry Ltd v Highfern Pry Ltd [1985] 1 Qd R 446.

72. Eg British Steel Corp v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504.

73. Dietrich, above n 9, p 126.

74. [1977] 2 NSWLR 880. Other examples can be found, especially from Canadian jurisdictions. See Dietrich, above n 9, pp 64–66. Two types of cases are illustrative: (1) those in which a plaintiff incurs expenses in preparation to performing an anticipated contract, where such work has not been requested (at be st only encouraged or approved) by the defendant, or may even have been only reasonably foreseeable; and (2) cases in which the plaintiff performs work which would have benefited the plaintiff, had the contract proceeded, but which benefits do not flow to the plaintiff or the defendant because the contract does not eventuate. An example of type (1) is Brewer v Chrysler Canada Ltd [1977] 3 WWR 69, in which the plaintiff incurred expenses in preparation for commencing business, in expectation of being awarded a car dealership; the ‘benefit’ of this work was ultimately either wasted or went to a third party (the party eventually granted the dealership). Importantly, the plaintiff, succeeding in a quantum meruit claim, was awarded not only the full expenses he had incurred, but also successfully recovered two months' salary for the time spent organising the preparatory work (and see also Maclver v American Motors (1976) 70 DLR (3d) 606). Cases of type (2) often involve work on the defendant's land (the subject of the incomplete contract) and are particularly interesting, because in some examples the work will not have resulted in any objectively measurable benefit (see eg Estok v Heguy (1963) 40 DLR (2d) 88, in which the plaintiff fertilised land of the defendant which he was not intending to use for agriculture. and cf Preeper v Preeper (1978) 84 DLR (3d) 74, and cases above n 71).

75. The reasons for the remedy in both reliance-based cases and in restitution (even if such reasons are disguised by the label ‘unjust factor’) are the same: see (c) below. Since restitution must of necessity also make good a plaintiff's corresponding loss, there is thus no reason to continue with a separate unjust enrichment analysis. Contrast McKendrick, above n 10, pp 180–181.

76. See eg Banner Homes Group plc v Luff Developments Ltd [2000] 2 All ER 117 at 140–141 and below, text to nn 101–103. The constructive trust in cases such as this is based on what has been called the Pallant v Morgan equity, which arises where it would be unconscionable for a defendant to deny the plaintiff a beneficial interest in property in breach of an informal (that is, not contractually enforceable) arrangement or understanding. The elements which need to be made out in order to establish the equity (see at 138–139) are very similar to the elements of precontractual liability set out in this article. In Pullunt v Morgan [1953] Ch 43, [1952] 2 All ER 951 itself, the plaintiff had failed to bid for property on the basis of an agreement with the defendant that he should bid for it and reconvey part of it to the plaintiff. On the facts, the plaintiff had not suffered any financial detriment as a result of the defendant's refusal to comply with the agreement, since any bid of the plaintiff would in any case have been exceeded by that of the defendant. The defendant, however, obtained an advantage as a result of the agreement in obtaining the property more cheaply than would otherwise have been the case. See discussion of the case in Banner Homes Group plc at 129–130.

77. R Grantham ‘Security of Contract: The Challenge from Restitution’ (2000) 16 JCL 102, 115, n 77, has suggested that a similarly formulated third element or factor of precontractual liability ‘canbe understood as merely a conclusion legitimately to be drawn from the presence of the first two factors’. Such a suggestion does not correspond with the case law, however. Whichever doctrinal mechanisms are used to impose precontractual liability, detrimental reliance (element (b) above) on a belief that a contract exists or will exist (element (a) above) alone does not suffice for liability to be imposed. For example, if estoppel is relied on to impose liability, a plaintiff would need to show that the defendant both was responsible for (or at least was aware of) the plaintiff's belief and either encouraged or acquiesced in the plaintiffs detrimental reliance (such that the defendant's conduct is unconscionable). That people make detrimental choices on the basis of beliefs which turn out to be false or which are falsified is not reason enough to shift the consequences of their choices to others. There must exist some reasons for shifting the losses to others and, it is suggested, such reasons are encapsulated by the third element of liability as set out herein.

78. Fridman, G H L Restitution (Ontario: Carswell, 2nd edn, 1992) p 301 Google Scholar.

79. Dietrich, above n 9, p 109.

80. Eg Box v Midland Bank [1979] 2 Lloyd's Rep 391; perhaps cases cited above n 71.

81. Eg Van den Berg v Giles [1979] 1 NZLR 111. If a plaintiff is better equipped to be aware of or safeguard against impediments to a final contract, then such a plaintiff ought not to succeed in an action for losses arising from a failure to complete the contract. Cf Jennings & Chapman Ltd v Woodman, Matthews & Co [1952] 2 TLR 409.

82. [1977] 1 NZLR 635.

83. Ibid, 637–638.

84. Dietrich, above n 9, p 145.

85. See Grey, K Elements of Land Law (London: Butterworths, 2nd edn, 1993) p 331 Google Scholar, nn 13–1 4, and cases cited therein.

86. P D Finn ‘Unconscionable Conduct’ (1994) 8 JCL 37, 49.

87. Ibid, p 42.

88. See also generally G R Shell ‘Opportunism and Trust in the Negotiation of Commercial Contracts: Towards a New Cause of Action’ (1991) 44 Vanderbilt LR 221.

89. See Dietrich, above n 9, p 127.

90. Eg Construction Design & Munagernenr Ltd v New Brunswick Housing Corp (1973) 36 DLR (3d) 458.

91. 7 September 2000, unreported, HC. Hart J (http://www.law.cam.ac.ukstitution/archive/englcases/easat.htm).

92. ‘The claimant's costs were incurred in the belief that it would get them (and more) back under the sub-contract if the defendant's bid succeeded.’ Ibid, para [70].

93. Ibid.

94. Ibid.

95. Eg where the award is limited to the actual expenses incurred by the plaintiff without any profit component. See further Dietrich, above n 9, pp 71–72.

96. See McKendrick, above n 47, p 218.

97. This will be the case, again irrespective of whether the claim is in contract (see eg Way v Latilla [1937] 3 All ER 759) or restitution. The clearest illustration of the latter is provided by cases involving defective or unenforceable contracts, where the existence of a complete agreement makes it easier, as a matter of fact, to discern the parties ‘ intentions. Given the willingness of the courts to consider the parties’ intentions in such cases, even whilst insisting upon the restitutionary rather than the contractual basisof such claims (see eg Pavey & Matthews Pry Ltd v Paul (1987) 162 CLR 221), there is no reason why parties' intentions as to the price payable for services will not also be considered in the context of incomplete contracts where there is some evidence of such intention.

98. Cf Mason, above n 21, p 72, who emphasises contract law's ‘new focus on the reasonable expectations of the parties’, though his comment is not necessarily primarily directed at the remedial consequences of liability, but to the broad protective purpose of rules imposing such liability. Although I am using the term ‘reasonable expectations’ to mean the same as what a plaintiff ‘might reasonably be entitled to expect’ (as seemingly does J Stapleton ‘Good Faith in Private Law’ (1999) 52 Current Legal Problems 1, 17), the two formulations are not coterminous; the term ‘reasonable expectations’ may also encompass a plaintiffs actual expectations which are reasonably held in the circumstances.

99. Eg Walrons Stores (Interstute) Ltd v Maher (1988) 164 CLR 387.

100. Some cases of proprietary estoppel are illustrative, eg Uniq Joint Stock Mutual Banking Association v King (1858) 25 Beav 72, 53 ER 563.

101. [2000] 2 All ER 117. The constructive trust in such cases arises where it would be unconscionable for a defendant to deny the plaintiff a beneficial interest in property in breach of an informal (that is, not contractually enforceable) arrangement or understanding. See also above n 76.

102. [2000] 2 All ER 117 at 122.

103. The English Court of Appeal stressed, however, that it was not enforcing the parties' unenforceable bargain (nor making for them some bargain which they had not themselves made: at 140), but rather that ‘the equity is invoked where the respondent has acquired property in circumstances where it would be inequitable to allow him to treat it as his own;.It is invoked because there is no bargain which is capable of being enforced’ (at 140). Consistent with this view is the fact that although the appellant did get the share of the property it had bargained for under the unenforceable agreement, it did so without the associated rights and obligations attaching to the expected joint venture agreement. Consequently, even if we cannot say that the appellant's actual expectations were fulfilled, at the very least its reasonable expectations were.

104. One objection to recognising a single cause of action for precontractual liability (eg by recognising a general duty to negotiate in ‘good faith’— cf German law discussed below) is that such acause of action must of necessity be stated in general termsand thus requires the application of a range of different standards of conduct in order to solve the range of possible problems. For example, as is evident from German law considered below, precontractual duties giving rise to liability culpa in contrahendo encompass at least two different standards of conduct, namely good faith or honesty, and reasonableness or due care.

107. Another objection which may be made to not maintaining a distinction between the various doctrinal mechanisms or causes of action which are utilised in the precontractual context is that each individual action gives rise to specific and different remedial outcomes. For example, McKendrick has suggested that contract law is often an inappropriate mechanism because of the ‘relative generosity’ of the expectation based-remedy (above n 10. p171). This is misleading, however, for as already noted above, contract law nced not be used necessarily to enforce the anticipated contract itself; it can also be used to enforce an ancillary contract in relation to preliminary services performed. And in either type of contract, gaps as to price may be filled by resort to reasonable terms; consequently, the remedy granted is a quantum meruit for the reasonable value of the services, the same remedy which usually follows from liability imposed in restitution. Further, contractual relief can also be limited to compensation of reliance losses. As Famsworth (above n 20, p 25) has pointed out, if parties agree to negotiate in good faith, than the parties will generally perceive such an agreement precisely as protecting such reliance interest should one party pull out of negotiations, rather than as taking away a party's right to withdraw. It should be added that even if separate doctrines do give rise to different remedial responses, they ought not to be given disparate treatment if certain common elements necessary for relief can be identified, allowing for recovery in one or other of the doctrines, that is, if the different remedial responses are triggered by the same causative events or facts and arethus explicable on the same basis.

105. Eg Butler Machhe Tool Co Ltd v Ex-cell-O Corporation (England) Ltd [1979] 1 WLR 401, [1979] 1 All ER 965. A less formal, more inclusive view of contract law based on a common core concern with the assumption of obligations – consider, eg, S J Stoljar's discussion of ‘loose agreements’ in The Law ofQuasi-Contract (Sydney: Law Book Co, 2nd edn, 1989) pp 192–196, 239–245, and ‘Estoppel and Contract Theory’ (1990-1) 3 JCL 1 - could solve some, but clearly not all, problems of ‘precontractual’ liability. To the extent that the courts enforce ancillary or ‘more modest’ contracts than those anticipated, we can still refer to such cases as imposing precontractual liability. See also Dietrich, above n 9. pp 136–137.

106. The third possibility, that of unjust enrichment, it has been argued, does not have any useful explanatory function in this context.

107. The doctrine of culpa in contruhendo also exists in Austrian and Swiss law, though there are, of course, differences in its operation in each legal system.

108. See eg the summary of the state of affairs in German and Swiss law in Medicus, D ‘Die culpa in contrahendo zwischen Vetrag und Delict’ in Forstmoser, P, Giger, H, Heini, A and Schluep, WR (eds) Festschrift für Max Keller (Zurich: Schulthess, 1989)Google Scholar. As Schlechtriem, P Schuldrecht, Allgemeines Teil (Tübingen: Mohr Siebeck, 3rd edn, 1997) p 17 Google Scholar, has said, a number of ‘differing theories as to the doctrinal classification of such liability have been put forward’.

109. Markesinis, B S, Lorenz, W and Dannemann, G The German Law ofobligation (Vol 1 The Law of Contracts and Restitution: A Comparative Introduction) (Oxford: Clarendon Press, 1997) p 64 Google Scholar. One of the foremost advocates of such a view in German law is Canaris, C-W ‘Schutgesetze - Verkehrspflichten - Schutzplichten’ in Canaris, C-W and Diederichsen, U (eds) Festschrift für Karl Lurenz (Munich: C H Beck, 1983) p 27.Google Scholar

110. More broadly, the parties must have entered some relationship with a view to a legal transaction (‘Aufnahme von rechtsgeschâUftlichem Kontact’: Koziol, H Österreichisches Huftpfchtreecht Vol II (Vienna: Manz, 2nd edn, 1984) p 71.Google Scholar

111. Where a potential customer, perhaps even an unwilling purchaser, enters a shop, the precontractual duty may arise. See Medicus, above n 108, p 211. Note, however, that cases such as these are not of particular interest here, since they are best seen as ‘rectifying the deficiencies of the German law of torts’ (Markesinis et al, above n 109, p 66) in particular, by expanding the limited form of vicarious liability applicable to torts (§831 BGB) and replacing it with the broader vicarious liability provisions applicable to contracts.

112. Markesinis et al, above n 109, p 64.

113. See above n 109.

114. For references to the literature adopting differing classificatory approaches, see egschlechtriem, above n 108, p 13. See also Schmidt, S Der Abbruch von Vertragsverhandlungen im deutsch-schweizerischen Handels-und Wirtschaftsverkehr (Konstanz: Hartung-Gorre, 1994) p 88 Google Scholar, suggesting that the decision of the Bundesgerichtshof (BGH) of 22 February 1989, JZ 1991 199 does not support culpa in contrahendo liability on the basis of a ‘third lane’ between contract and tort.

115. Schmidt, ibid, p 59, quoting U Huber Gutachten 1, p 647 (my own translation).

116. See §831 BGB. In essence, employers can escape vicarious liability under this provision if they can show that they have hired competent staff and carefully supervised them. The position is slightly different under Austrian law: see §1315 ABGB (Allgemeines Bürgerliches Gesefzbuch), which provision is both narrower and broader than §831 BGB; broader in that there is strict liability of employers if they employ ‘unfit’ or knowingly employ ‘dangerous’ persons (ie liability cannot be avoided in such cases even if employers have taken all reasonable steps to safeguard others); narrower in that should employees not fall within these two types (and the onus of proof of such remains with plaintiffs), there will be no vicarious liability merely for failure on the part of employers to supervise their employees carefully.

117. See §278 BGB, and §1313(a) ABGB. Under these provisions, vicarious liability extends to liability for any acts committed by both employees and independent contractors and employers can not exculpate themselves by demonstrating their employees’ competence.

118. For a summary of such cases, see Medicus, above n 108, p 215.

119. At common law, such situations would be covered by the law of misrepresentation, duties of disclosure and related concepts.

120. Medicus, above n 108, p 214.

121. Cf Schlechtriem, above n 108, p 15, and see Medicus, above n 108, pp 213–214 and U Eisenhardt ‘Ansprüche aus culpa in contrahendo wegen Verletzung der Verpflichtung über erkennbare Unwirksamkeitsgründe aufzuklâUren’ in Leser, H G and Isomura, T (eds) Weg zum Japanischen Recht: Festschrift für Zenraro Kitagawa (Berlin: Duncker & Humblot, 1992) p 297 Google Scholar.

122. Apart from unjust enrichment arising from a plaintiff's Leistung, §812 BGB provides for a claim for unjust enrichment where someone has received something ‘in any other manner’; this has generally been interpreted to include three possible sub-categories: the Eingriffskondiktion, Rückgriffkondiktion and Verwendungskondiktion. For an explanation of these, see eg R Zimmermann and J du Plessis ‘sBasic Features of the German Law of Unjustified Enrichment’ [1994] RLR 14.

123. Cf H Koziol ‘Delikt, Verletzung von SchuldverhâUltnissen und Zwischenbereich’ JB1 1994 209, p 213 Google Scholar.

124. Cf decision of BGH of 22 February 1989, JZ 1991199.

125. WF Ebke ‘Report of the Federal Republic of Germany’ in Formation of contracts and preconrractual liability (International Chamber of Commerce, 1990) p 42.

126. See Schmidt, above n 114, p 83ff, and references therein.

127. A comparison can be made with the requirements for establishing liability on the basis of estoppel in common law systems: a defendant's conduct must, in all the circumstances, be unconscionable, and such unconscionability can be established both by reference to the manner in which an expectation was created and the circumstances of and reasons for its subsequent falsification. See Thompson v Palmer (1933) 49 CLR 507 at 547, and cf Mason, above n 21, p 92.

128. It is not clear whether Austrian law goes so far: cf Koziol, above n 110, pp 76–78.

129. JZ 1991 202, p 203. Schmidt has pointed out that if liability can be established without any fault on the part of the party breaking off negotiations, then it would be more accurate to speak of contruhendo sine culpa, rather than culpa in contrahendo (above n 114, p 91, and see references therein for other criticisms).

130. For example, because the object of the intended negotiations has already been sold. This covers the type of problem arising in the example considered below text to nn 184–188. The example is similar to one given by K Larenz in Lehrbuch Des Schuldrechts (Munich:C H Beck, 12th edn, 1979) p 92 and earlier editions, though Larenz does not give any authority for his inclusion of this example as a typical case of liability for culpa in contrahendo.

131. Or no negotiations take place (to cover the possibility considered in the paragraph immediately above).

132. Cf Schmidt, above n 114, p 84. Similarly, this will be satisfied if aplaintiff has not been given a timely warning that no negotiations will take place.

133. See Koziol, above n 110, p 78.

134. Cf Markesinis et al, above n 109, p 70.

135. See above text to nn 88–94.

136. Cf also Mason, above n 21, p 83: a duty to negotiate in good faith will need to be confined to situations ‘in which the relationship of the parties is such as to generate a reasonable expectation that a party will not withdraw for capricious, arbitrary or bad faith reasons’.

137. Eg Gunst, above n 129, pp 204–205, and note the BGH decision, NJW 1996, 1884, 1885, that such an obligation ‘to compensate reliance loss nevertheless signifies an indirect compulsion to conclude a contract’.

138. Cf Cohen, above n 21, pp 30–31.

139. F Kessler and E Fine ‘Culpa in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study’ (1964) 77 Harv L Rev 401, p 448.

140. As discussed above, considerable inroads have been made into the ‘noduty’ rule, by application of rules from contract, estoppel, restitution and tort. Cf Markesinis et al, above n 109, p 70. See also G Kiihne ‘Reliance, Promissory Estoppel and Culpa in Contrahendo: A Comparative Analysis’ (1990) 10 Tel Aviv University Studies in Law 279, 294–295.

141. BGH JZ 1991199.

142. Ibid, 200 (my own translation). See also BGH NJW 1996, 1884.

143. Ibid, 202.

144. See above nn 3–5 and text thereto.

145. Perhaps BGHZ 92, 164, and cf Sabemo Pty Ltd v North Sydney MC [1977] 2 NSWLR 880. One can thus imply an assumption on the part of the defendant to pay for the services should the contract not be finalised.

146. Cf BGH MDR 1961, 49.

147. For an extensive outline of relevant decisions of the German and Austrian courts, see R Ostheim ‘Zur Haftung für culpa in contrahendo bei grundloser Ablehnung’ JB1 1990, 522, 570.

148. See eg BGH MDR 1954, 345 (discussed in Ostheim, ibid, p 571).

149. See eg BGH NJW 1975, 1774; cf Waltons Stores (Interstate) Ltd v Muher (1988) 164 CLR 387.

150. See eg BGH NJW 1996, 1884, and the BGH decision of 19 October 1960, in Ostheim, above n 147, p 571.

151. See above text to nn 82–87. Similarly, Austrian case law does not appear to extend precontractual liability beyond that which exists at common law and the facts of cases granting relief are often comparable to those at common law. A detailed summary of Austrian (and German) decisions is provided by Ostheim, above n 147. These include SZ 7/66, in which a plaintiff gave up his existing job upon repeated assurances of obtaining a position with the defendant. Cf Brewer v Chrysler Canada [1977] 3 WWR 69; and Hoffman v Red Owl Stores 133 NW 2d 267 (1965). See also SZ 27/120, in which the facts seem even closer to those of Brewer v Chrysler Canada and yet recovery was denied. The Austrian courts also consider the question of who has taken or assumed the risk of a particular expense or loss in determining whether liability arises. For example, in the Oberstes Gerichtshof's (OGH) decision JB1 1977, 315, the plaintiff, a prospective purchaser of a house, indicated to the vendors his intention to sell gold coins in order to finance the purchase of the house. He proceeded to sell the coins the following day, despite the fact that the parties had not agreed on a purchase price and that the plaintiff's latest offer fell ATS 20,000 short of the previously rejected offer. The defendants later decided to withdraw the house from sale. The plaintiff unsuccessfully sued for losses incurred in the sale of the gold. The Court stressed that he had made the sale entirely at his own risk. There was no duty on the part of the defendants to warn the plaintiff against his intended actions as there existed no expectation of a contract being finalised. In any case, the plaintiff had merely indicated the possibility of his selling gold coins as a means of financing the as-yet-unagreed purchase price. See Ostheim, above n 147, p 530. One much criticised case which seems to go further than the common law is OGH JB1 1990, 127, in which the OGH allowed an unsuccessful job applicant to recover the costs incurred in attending an interview which he had been asked to attend.

152. Even if this is not the case, quantum meruit may incorporate a reasonable profit component.

153. See Markesinis et al, above n109, p 68, citing the 1967 decision, BGHZ 48, 396.

154. See eg BGH NJW 1965, 812.

155. See references in Koziol, above n 110, p 79, who points out that in Austrian law such a remedy would run counter to 4861 ABGB. It may also be difficult to establish that the loss of expectation was caused by a defendant's breach of duty. In other words, if the defendant had made the plaintiff aware of the impediments to a contract being concluded, then in most cases of failed negotiations at least (though not necessarily in cases of contracts unenforceable for failure to comply with formalities), the plaintiff would have been able to avoid the reliance losses, but would have been unlikely to have concluded the contract successfully.

156. Above n 109.

157. See Koziol, H ‘The Borderline Between Tort Liability and Contract’ in Koziol, H (ed) The Unification of Tort Law: Wrongfulness (The Hague: Kluwer Law International, 1998), p 25 (footnotes omitted)Google Scholar.

158. Above n 123, p 214 (my own translation).

159. S A Smith ‘Concurrent Liability in Contract and Unjust Enrichment: The Fundamental Breach Requirement’ (1999) 115 LQR 245, 248, points out that the term ‘concurrent liability’ is used in two different senses, namely: (1) th at in respect of a particular set of facts, a plaintiff may satisfy the elements of two (or more) causes of action; and (2)that a breach of contract may also, as a possibility, ‘support’ or give rise to an action in tort, or vice versa.

160. It will be difficult to establish all the elements necessary for a claim in either category.

161. Cf Gunst JZ 1991 203.

162. Koziol, above n 114, p 217. Cf also Kessler and Fine, above n 139, p 449, writing in the context of ‘good faith’ and culpa in contrahendo as ‘residual’ concepts encapsulating broad standards of fairness and justice: ‘The law confronts the task, in the interest of certainty, of identifying and categorising these “residual” concepts, only to be faced with the realization that this process is never-ending.’

163. See Thompson v Palmer (1933) CLR 507 at 547, per Dixon J (as he then was).

164. Dietrich, above n 9, p 105.

165. McKendrick, above n10, p186, from The Law of Obligations—Roman Foundations of the Civilian Tradition (Oxford: Clarendon Press, 1996) p 245.

166. Ibid, pp 186–187.

167. The slightly pejorative term is McKendrick's, above n 10, p 163.

168. Stapleton, above n 98, p 27.

169. Cf Koziol, above n123, p 215.

170. 3 Corbin §609, at 689 (revised edn 1960).

171. Above n 139, p 449. See also Mason, above n 21, p 70: ‘with many legal concepts rooted in formalism, [the] element of certainty [is] illusory.’ See also ibid, p 89. Contrast Cohen, above n 21, pp 52–53.

172. The appropriate classification of precontractual liability may also be significant for the purposes of determining questions of jurisdiction and choice of law in private international law, particularly given that many contractual negotiations take place in an international context, and different legal systems may approach questions of liability in such cases in different ways. This issue, however, is outside the scope of this article.

173. Koziol, above n 123, p 213, citing Welser (my own translation).

174. Koziol, above n 157, p 25.

175. Koziol above n 110, p 75, and see also Medicus, above n108, p 207, and Canaris, above n 109, pp 93–94.

176. See generally Kessler & Fine, above n 139.

177. [2000] 2 All ER 117. See text to nn 101–103 above.

178. (1988) 164 CLR 387.

179. Schlechtriem, above n 108, p 20 (my own translation).

180. Cf ibid, p 18.

181. Cf Hedley, above n 31, p 196. Identifying and articulating the particular standards of conduct demanded of negotiating parties in order to solve particular factual problems should rebut any concerns, I would suggest, that broad principles such as a duty to negotiate in good faith and with care are a carte blanche for judicial discretion. See also, generally, Stapleton, above n 98.

182. See eg Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 particularly at 38–42; and under German law, §97 Gesetz gegen WettbewerbsbeschräUnkungen (GWB, ‘ActAgainst Restraints of Competition’), which sets out general principles governing the procedures for the award of public contracts. Note the wide definition of ‘contracting entities’ to which the provisions apply (§98).

183. Cf Schlechtriem, above n 108, p 19. See also above n 155.

184. Above n 109, p 71.

185. Above n 109, p 71, and see above n130. Although the BGH decision JZ 1991 199 (the newspaper case) makes it clear that a belief that a contract will be finalised is usually required, and not merely an expectation that it might be, it seems clear that an expectation that potentially fruitful negotiations will, with certainty, take place will also suffice if foreseeable reliance losses are incurred in preparation for such negotiations (against which losses a defendant could simply have safeguarded the plaintiff by advising him or her that there is no longer any point to the negotiations). And see, under French law, the case cited in Farnsworth, above n 20, p 21. Even under German law, however, a conclusion of liability would be doubtful if the facts were slightly different and the plaintiff merely relied on an enticing advertisement for the sale of certain goods which, prior to the plaintiff incurring travel costs to attend the sale, were sold out. See Medicus, above n 108, p 213. It seems clear that in such a situation, a plaintiff who travels to the sale without first checking the availability of stock is taking the risk.

186. Cf Perre v Aparrd Pty Ltd (1999) 198 CLR 180.

187. As to the relevance of the degree of negligence as a factor in determining whether liability for pure economic loss arises, see Perre v Apand Pty Ltd (1999) 198 CLR 180 at 328–329, per Callinan J; cf at 231, per McHugh J.

188. One of the reasons underlying the law's reluctance to impose wide-ranging liability in tort for pure economic loss is the capacity for such liability to excessively infringe upon parties’ freedom to engage in commercial activities which, of necessity, have economic consequences. Contract law, however, protects against pure economic harms when a defendant has assumed an obligation in relation thereto. Hence, if the protection of pure economic loss is generally within the realm of contract law and not tort law, it is suggested that a duty in tort may arise if aspects of contract law are present, aspects which justify wider, more far-reaching obligations. Eg if A owes a contractual obligation to B not to do a certain act in a way which harms B'seconomic interests, then there is no further infringement upon A's freedom of conduct, if A does that something and is thereby held liable in tort to C as well. Cf Perre v Apand Pty Ltd (1999) 198 CLR 180.