The implications of AV. Peter Fenech Noe vs Dipartiment tal-Kuntratti on the doctrine of culpa in contrahendo under Maltese law

Abstract

The doctrine of culpa in contrahendo was first propounded by Jhering who advanced the notion that damages should be recoverable from the party whose blameworthy conduct during contractual negotiations brought about the contract’s invalidity or prevented its perfection. The term, which in Latin means ‘fault in conclusion of a contract’, recognises a clear duty on prospective contracting parties to negotiate with care, and in general to refrain from doing anything which may lead the other negotiating party to act against his own interests before the conclusion of the contract. The theory further provides that liability for the loss suffered by a party to a prospective contract is to be considered as a form of pre-contractual liability. Culpa in contrahendo has nowadays spread to almost all the Continental legal systems, yet this remains unrecognised in Common law jurisdictions. The reason underpinning this may be attributed to the different theories adopted by each system; whereas the former follows la teoria dell’affidamento.The latter is strictly concerned with the theory of the autonomy of the will. Maltese Law is traditionally classified as a mixed jurisdictional system of Civil Law and Common Law. A more appropriate classification has been propounded by Kevin Aquilina who contemplates a ‘Common Law system with a Civil Law underlying layer.’ Consequently, the predominance of the will theory, a core feature of the Maltese Civil Code, brought with it an increase in the possibility of abuse in the sphere of contractual negotiations. This to the detriment of the party who had relied on the good faith of the other negotiating party in relation to the conclusion of a contract; but who at the end of strenuous negotiations found himself with no remedy. As a result, the Maltese courts have started to give greater importance to the affidamento theory and accordingly to the notion of good faith.