Pre-contractual liability is a very specific type of liability in contemporary civil law, based on a general duty to act honestly, even when negotiating a contract. There are currently two conditions for the arise of a duty to pay damages.
In the first case, the party negotiating the contract is under an obligation to pay damages when it initiates or continues to negotiate the contract without intending to conclude the contract. In the second case, the party negotiating the contract has an obligation to pay damages if the parties reach such a point in the negotiation of the contract that the conclusion of the contract appears highly probable, but the party negotiating the contract terminates the negotiation of the contract without having a just ground for doing so, despite the reasonable expectation of the other party. Damages in both cases cannot then exceed the loss from the failure to conclude the contract in similar cases.
Pre-contractual liability can therefore be understood as a protection for one of the contracting parties in the event of an attempt to abuse the principle of freedom of contract and a breach of the general duty of honesty in legal relations. However, the question of what constitutes a just cause for terminating the contractual process remains rather contentious. In this respect, we are unlikely to see any specific test or any other general guidance. The Supreme Court, even in its recent decision on pre-contractual liability, has said that what is a just ground for termination of the contractual process cannot be said in general terms, as it will always depend on the circumstances of the particular case.
On the other hand, it is clear from the Supreme Court's case law that any liability for damages arising from the termination of a contractual process without just grounds should be the exception rather than the rule. According to the Supreme Court, any rational consideration by the acting party, based on objective fact, as well as defensible subjective beliefs based on objective beliefs, should be considered just ground. Although the foregoing does not give us much insight into the justifiable ground for terminating a contract, it is clear from the Supreme Court's decision that a party negotiating a contract in good faith should not be concerned about pre-contractual liability, although a degree of caution is always in order.