Culpa In Contrehendo Liability(The Liability Which Exists Due To Errors In Contract Negotiations) – Av. Lider Tanrıkulu

Classic Roman Law bases the sources of liability on two main pillars. One of these pillars is the contract liability, whereas the other is tort liability (liability which occurs due to unrighteous/tortious actions). Jhering, in his article which he wrote in 1861 titled “Error in Unestablished and Invalid Contracts/Culpa in Contrehendo,” tried to draw attention to the fact that these two concepts of liability are not enough to cover some cases. Jhering, who studied the historical and contemporary texts about this matter, found many positive legal regulations in the Public Law of Prussia which refers to the culpa in contrehendo liability. This encouraged Jhering to systemize the culpa in contrehendo liability and to present a new type of liability.

For us to speak of a contract liability, the parties involved must have initiated a legal action with declarations of intention which are consistent with each other. As it is clear that there cannot exist a contractual liability without a signed contract, the lack of a signed contract leads to the lack of the function of performance obligations and, therefore, to the lack of obligations concerning the contract. The parties must establish a contract in accordance with their goals and with their common will for the mention of a liability of compensation which would occur due to the failure in fulfilment of principal and secondary performance obligations. It can therefore be said that the errors and acts of negligence which may occur before the contract is signed shall not lead to any legal liabilities/obligations. There is a different type of liability for contract negotiations which start with a legal contact phase (social contact) but are not signed due to the error of one of the parties.

The liability for tortious acts can be defined as the liability for compensation for damages done to others. One of the elements of illegal action, damage, error or causal relevance must be present for the existence of this liability. The application of regulations concerning tortious acts does not seem possible for every negligent act which occurs during the negotiations phase. A damaging act which cannot be defined tortious will not be a subject of this type of liability. For example, the actions of a person who introduces him/herself as a rich tradesperson to make the other party think that he/she is able to fulfill the conditions of the contract, will not be held responsible for cheating in such a way unless his/her acts reach a certain level of intensity which would require masterful cheating. Likewise, a person who introduces him/herself as the head of the board of management of a company will not be responsible for cheating in this way which does not deprive the other party of the ability to further investigate the truth of this claim.

Likewise, the principle of publicity concerning trade registries is regulated by the article no. 35/2 of the Turkish Trade Act. According to this everyone can investigate trade registries. In terms of a capable tradesperson (Turkish Trade Act 18/2), the principle of publicity prevents the existence of material elements of this action. Likewise, the claim of the person to be the president of a board of management can always be verified through a trade registry. The act, therefore, cannot be described as a tortious act.

The questionable way in which the liabilities for tortious acts and contracts were regulated makes the preparatory phases of contract negotiations questionable. Yet, there is a understanding that the parties are honest and this understanding stems from the law (Ex lege) Article no.  2 of the Turkish Civil Law states that “everyone has to be honest when they are carrying out their duties and using their rights,” which strengthens the notion that a person should be reasonable and honest in all his/her dealings. Therefore, the culpa in contrehendo liability does not protect the establishment of the contract, but the legal values presented by the sides. These values concern those who are under the protection of the parties, as well as the head of the parties. By initiating the contract negotiations, the parties will have presented to each other’s influence the legal values including life, health, estates and property. This will be regarded as a natural result of the relationship of trust between the parties.

As it will be further described, the reason that classical liability approaches fail to fully explain the culpa in contrehendo liability made it a part of the trust liability. The trust liability is accepted as the trust which stems from the actions of a person towards others. The trust liability exists without any need for a contractual relation and is based on legal grounds. The article no. 2/1 of the Turkish Civil Law stands as the legal basis for the existence of this liability. In accordance with all this, it can be said that the rule of trust is a collection of rules accepted by everyone in a society which consists of normal, reasonable and sane people. The trust liability is a supreme notion which also includes the culpa in contrehendo liability. The reason for that is the fact that the trust liability is related to the processes after the signing of the contract as well as before it, whereas the culpa in contrehendo liability is related only to the processes which comes before the signing of the contract.

The trust liability and protection obligation are related concepts which develop in accordance with each other. Protection obligation starts with the contract negotiations, accompanies the primary obligations independently during the signing phase and continues after the conclusion, that is the conclusion of the primary performance obligations, of the contract.

For instance, culpa in contrehendo liability starts when a future rent payer goes to see a factory and starts talking to the owner about renting the factory. From this point, the protection obligation is in effect. The information provided by the owner about matters like the age of the property and usage conditions etc. are regarded as an element of culpa in contrehendo liability within the limits of protection obligations as far as such information affects the future rent payer’s decision about establishing a contract. Likewise, the obligation to carrying out the negotiations in an honest manner, the obligation to not to unexpectedly draw from the negotiations, the obligation to not to unnecessarily take the time of the other party with improbable contract conditions, or by falsely acting like an authorized person and making the other party think that the contract will be successfully concluded, are all related to the culpa in contrehendo liability.

An error which did not lead to any damage cannot be the subject of culpa in contrehendo liability on its own. There needs to exist a causal relation between the error and the damage for there to be a mention of culpa in contrehendo liability. An error which did not cause any harm will not be mentioned in terms of its relation to culpa in contrehendo liability.

THE LEGAL NATURE OF CULPA IN CONTREHENDO LIABILITY

The Theory of Contract

The endorsers of this theory think that culpa in contrehendo liability should be evaluated with its relation to contract liabilities. According to the classical understanding, it can indeed be said that there needs to be an established contract for there to be a mention of contract liabilities. As the phase of negotiations are not considered to be a part of a concretely established contract according to the classical approaches, some theories were developed which aim to expand the reach of contract liabilities to include culpa in contrehendo liabilities.

The Theory of Contracts which are to be Established

This theory considers the pre-contract negotiations a part of the contract to be established. According to those who endorse this theory, a person is obliged to obey the same rules during the negotiation and contract phases. The pre-contract liabilities and obligations are thus evaluated as part of the contract which is to established. There are two different points of view about this theory. Those who evaluate his matter from the first point of view endorse the invalidity of the contract. They think that the failure to establish the contract does not leave any room for culpa in contrehendo liability, as the liabilities concerning the contract itself will be in effect after its establishment.  They claim that the right to file lawsuits which stems from the existence of the contract has a broader reach and renders the existence of culpa in contrehendo liability unnecessary. Those who evaluate this matter from the second point of view, endorse the validity of the contract, seeing it as the ultimate goal of the negotiation processes and claim that its establishment is the conclusion of both the negotiation processes and culpa in contrehendo liability.

Both of these points of view are subject to criticism in the doctrine, as it is thought that they limit the extend of the culpa in contrehendo liability to the existence of the contract, thus rendering it ineffective without any regard for the unique structure of the pre-contract negotiations.

The Theory of Independent Contract

This theory considers the pre-contract negotiations as completely independent from the contract. This theory is endorsed by people of two different understandings. The first one is related to the protection and explanation obligations. From this point of view, culpa in contrehendo liability starts with the start of the negotiations and not with the will of the parties to establish a contract. The second one is related to social contact. An action which was taken in relation to the contract is considered to be social contact. For example, a person who goes to a store to discuss something related to a future contract has initiated a social contact in this sense.

This theory has been subject to criticism due to the fact that it is based on the notion that a contract can be established by an implicit declaration of intent. Those who criticise this theory claim that the lack of an explicit and profound declaration of intention is against the concept of positive law and they further support their idea by pointing out that contracts which lead to protective obligations cannot be formed by an implicit declaration of intention.

The Theory of Tortious Act

Another classical source for liabilities is the theory of tortious act. The endorsers of this theory base it on the principle: “A contract needs to be signed for there to be a mention of contractual liabilities.” No contract can be considered to be stablished until its signing and, therefore, rulings concerning tortious acts shall be in effect for culpa in contrehendo liability. For there to be a mention of a tortious act, there needs to be an illegal action, damage, error and a causal relation between these and the matter at hand (for which a person is to be considered liable). It is accepted by this theory that the focus of the liability for tortious acts is the acts which violate the principles of care or honesty liabilities and which violate the obligations which ensure that people do not harm each other. It can, therefore, be said that the endorsers of this theory see illegal actions as actions which lead to the mention of culpa in contrehendo liability.

Those who criticise this theory draw attention to the fact that the legislating body made a clear distinction between the common and abstract care obligations and the concrete car obligations which are in effect between particular people. According to this, the parties which meet for an contract will have an influence on each other’s interests even if there are no established contracts between them and this will put culpa in contrehendo liability out of the reach of liabilities for tortious acts. It can be seen that regulations in the Turkish Law of Obligations related to contract liabilities are more in favor of the victim when compare to the regulations in the Turkish Law of Obligations which are related to tortious act liabilities. Article 72 of the Turkish Law of Obligations set the overtime duration for tortious acts as 2 years, whereas article no. 146 of the same law set the overtime for contract as 10 years. It is claimed that this was due to the understanding that concrete/objectified care obligations are protected more than abstract care obligations. According to this, it would be more righteous to apply the regulations related to contract liabilities concerning the parties who have become vulnerable to each other’s interests, instead of applying the abstract regulations and rulings related to tortious act liabilities. The fact that, concerning the damage done by the helpers in terms of culpa in contrehendo, article no. 66 of the Turkish Law of Obligations, which was formed under the rulings for tortious acts, is in effect instead of article no. 116 of the Turkish Law of Obligations is another controversial matter. The person who has hired the helper will not be liable for the acts of the helper if it is proven that the employer has shown the necessary care when picking the employee and giving the employee the necessary instructions for doing business with care. This has been subject to criticism and, indeed, the fact that the person who has hired a helper (the employer) can save hi/herself from liabilities by proving that he/she has been careful is not sufficient to support the claims for the existence of the relation of an objectified/concrete care obligation between the parties. Also, it is against the reasons of the existence of culpa in contrehendo liabilities for there not to be a direct relation between the helper and the employer. The employer can be saved from compensation liabilities by introducing an evidence for salvation. The employer may have never seen the employee. A direct relation of liability would be set between people who may not know each other and it would not be very righteous to establish a liability for honesty between people who do not know each other.

Trying to solve the issue by modalities related to tortious acts liability is not very righteous considering the sturcuture of culpa in contrehendo liability which is much closer to the contract.

Mixed Theories

Those who endorse mixed theories claim that culpa in contrehendo liability cannot be thoroughly explained through the theories above. For them, culpa in contrehendo liability is a unique type of liability which combines the features of both contract and tortious acts liabilities.

Those who endorse these mixed theories think that it is not possible to evaluate culpa in conterehendo liability entirely through only one theory. Rather, they think that it would be better to apply the features of different theories through different modalities.

New Solutions Concerning the Legal Characteristic of Culpa in Contrehendo Liability

The fact that the classic contractual and tortious act liabilities are not sufficient when it comes to establishing the boundaries of pre-contract liabilities and obligations made it necessary to find new solutions for this issue.

When it was seen that the legal sources for obligations which were based on contraactual and tortious acts liabilities were not enough to explain culpa in contrehendo liabilitiy, the sources for obligations were redefined and contract negotiations were defined as a new source for legal obligations. According to this point of view, culpa in contrehendo liability stems directly from the law. This point of view lays its foundation on the culpa in contrehendo regulations which are already available in positive law. The legal relation of obligation is important because of the fact that it forms a relation of obligation independent from obligations of performance by forming a distinction between itself and contractual and tortious acts liabilities. Accepting the legal relation of obligation as the source of contract negotiations will form a distinction between performance and protection obligations. Thus, a new source of obligation which is not related to performance has been formed.

The distinction between the protection and performance obligations led to the formation of a new type of obligation which is not related to any performance and consists only of protection obligations. This type of obligation was categorized as “legal debt relation which is independent of performance obligations. This relation of debt has been defined as the relation of debt/obligation which contains protection obligations which start with social contact and continues throughout the duration of the signing of the contract and the performance of the parties. Culpa in contrehendo liability can be considered to be a part of such a relation of obligation/debt, as it also starts before the contract. Yet, it must be stated that even after the extent of culpa in contrehendo liability comes to an end after the establishment of the contract, the above-mentioned relation of obligation which is free of performance obligations will continue to be in effect alongside the obligations of protection.

The issue of obligations which stems from legal relation of debt obligation which is independent of performance obligations has been explained through protection obligations which were regulated under trust liability. Performance and protection obligations should be explained at this point.

Performance obligations are categorized under two parts as primary obligations, which stem from the contract,  and secondary obligations. The secondary obligation is, actually, the compensation obligation which comes into effect after the violation of the primary obligations. The primary obligations are also categorized under two categories as primary and secondary. The primary obligations are obligations which are in effect after the signing of the contract. They are categorized under two categories as primary performance obligations and secondary performance obligations. The primary performance obligations form the subject-matter of the contract. The renting of car through car rent contract is the main performance obligation of such a contract. The secondary obligations of performance are not in effect without the primary ones. If there is condition in a car rent contract for the car to be delivered to the person who rents it at an airport, it can be said that the secondary performance obligation is formed through such a condition. It is also the subject of a secondary obligation of performance for there the car to have an obligatory financial insurance policy.

Secondary obligations and secondary performance obligations are usual mistaken for one another. Secondary performance obligations are a part of the primary obligations whereas the secondary obligations are independent from the primary obligations and exist to support them. The legal source of the secondary obligations is the rule of honesty which was introduced by the article no. 2/1 of the Turkish Civil Law. The secondary obligations are categorized under two parts as obligations which assist performance and protection obligations. Obligations which assist performance stem from the rule of honesty. They come into existence with the contract and end with the conclusion of the contract. They are directly related to the primary obligations of performance. Even though the doctrine considers the article no.2/1 of the Turkish Civil Law to be source of the obligations which assist performance, the fact that they depend on the existenc of primary performance obligations led some to claim that their source cannot be the rule of honesty. According to their point of view, the obligations which assist performance stem from a relation of obligation, and not the rule of honesty.

Yet, the protection obligations, unlike all performance obligations, are in effect before the contract, continue to be in effect throughout the duration of the contract and continue to exist after its conclusion. In this sense, they are in no way related to the primary performance obligations. They may well exist without them. Culpa in contrehendo liability is a natural type of protection obligations and does need a contract to exist, just like it does need a contract to be valid to exist.

This is the main reason why culpa in contrehendo turns into a third type of liability which is based on the relation of trust and which is different than contractual or tortious act liabilities.

The obligation of protection does not protect the performance of the contract, but rather protects the legal interets of parties. For example, the protection obligations ensure the protection of the legal values like that the honesty of parties with each other, rather than ensuring the renting of the car and the payment of the rent. Such legal values which are expected to be protected are called collective interests. These interests make the parties responsible to not to harm the individual or property interests of each other and make them responsible to protect them. For example, the information provided by the person who is going to rent a car must be protected within the extend of the collective interests. Even if a rent contract is not established because of the lack of a suitable car, the firm which owns the car will be liable for any harm which may come to the person who has called the firm to rent a car. The firm, which has acted against the principles of culpa in contrehendo liability, will have to pay a compensation for the damage which has occurred with a relation to secondary obligations.

The legal debt obligation which is independent from the performance starts to exist with the initiation of social contact. Yet, it would not be correct to say that every social contact leads to such an obligation. As it is mentioned above, the parties must have made clear to each other at least some of their legal interests, as the protection obligations exist to protect such interests. There needs to be a legal interest for there to be a debt obligation. The contact which leads to such an obligation is called “legal action contact” in the doctrine. If the person who has called a firm to rent a car is a potential customer, then it is definitely possible to say that such a contact is related to legal interests. Thus, the intention behind the first contact is very important. The firm/business owner needs to prove that the other person/party did not come to the workplace with the intention of doing business if the other party claims so. If the firm/business owner proves that the person did not come to the workplace within the extend of a legal action, then there will not be any legal debt obligations. For example, if a potential customer and his wife, followed by third person who goes there to ask for directions, go to a workplace which is undergoing renovations and something falls on their head, the potential customer and his wife will benefit from the culpa in contrehendo liability, whereas the person who went there to ask for directions can only benefit from the tortious act liabilities, as his social interaction was not related to legal actions. The third person will be disadvantageous compared to the potential customer and his wife, as the rulings about tortious acts liabilities are weaker than rulings about culpa in contrehendo liabilities.

The legal action contact principle mentioned above stems from the relation of trust. The parties have established a relation of trust by meeting with legal action contact. By doing so, they have given the impression that they will be honest. This impression has led the parties to make their legal interests clear to each other. As it was mentioned above, the article no. 2/1 of the Turkish Civil Law makes it clear that this relation of trust stems from the Law. The legal debt obligation which does not depend on performance protects the trust between the parties. Yet, it must be stated that the party who demands protection is expected to use its rights with good intention. The protection of trust will cease to exist if the party which demands protection uses its rights in a malevolent manner, acting against the clause. 2/2 of the Turkish Civil Law.

The Conditions of Culpa in Contrehendo Liability

Error, causal relation and damage need to exist for the culpa in contrehendo liability to exist.

An error is looked for in the pre-contract phase if culpa in contrehendo liability is to be in effect. This error may stem from carelessness as well as intention. The person who has commited the error does not need to foresee the result to be geld responsible. It is enough to violate care obligations, which are expected of a normal human being, to be held responsible. As it is clearly stated by the law, the error may exist with objective liability. The article no. 47 of the Turkish Law of Obligations/Debts stands as a good example of culpa in contrehendo liability.

Another condition is the causal relation between the error and the damage. The error must be directly related to the violation of protection obligations and this must lead to harm.

The last condition is damage/harm. Harm is a direct violation of protection obligations. The harm may come to the properties as well as elements of collective interests. The harm/damage which has occurred will be compensated.

COMPARISON BETWEEN CULPA IN CONTREHENDO AND TORTIOUS ACTS AND CONTRACTUAL LIABILITIES

If there is violation concerning tortious acts and culpa in contrehendo at the same time, the victim may choose to receive compensation based on one of these concepts.

It is not possible for culpa in contrehendo to be compared to a signed contract. Culpa in contrehendo liability stems from a legal loop. As it has been mentioned before, there are no modalities for contract negotiations like there are for tortious acts and contractual liabilities. If a contract fills this gap, this will render the concept of culpa in contrehendo liability ineffective. Culpa in contrehendo is the part of the same protection obligations which are in effect before, during and after the contract. The establishment of the contract renders the pre-contract protection a part of the protection obligations as a whole. This is called “the inferiority of culpa in contrehendo when compared to culpa in solvendo” in the doctrine.

CONCLUSION

Even though culpa in contrehendo liability is directly related to the preparatory phases of many contracts which are related to many fields of law from business to consumer laws, it rarely shows itself in legal practices. The reason is not the small number of social conflicts about the preparatory phases, the reason is the ignorance concerning culpa in contrehendo. The ignorance shown related to the protection obligations, the understanding that contracts consist only of performance obligations and the belief that a contract exists only after it is signed result in the decrease of the applications of regulations and rulings concerning culpa in contrehendo liability, leading to many people to be victims. The lawyers can help the spread of the application of culpa in contrehendo liabilities by defining it for the situations they come across. As far as I can see, culpa in contrehendo liability is seen as a romantic idea in the doctrine, and therefore, is left unapplied by many lawyers. Yet, it seems that culpa in contrehendo liability will be mentioned much more in the future.

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