Pre-contractual liability and the juridical implications of 'Peter Fenech Av Noe vs. Dipartiment tal-Kuntratti'

Abstract

The focus of the term paper is that of identifying the implications that the landmark judgment Peter Fenech Av noe vs. Dipartiment tal-Kuntratti will have on future case law and the development of the Maltese Civil Code. Namely, it addresses the issue on the nature of pre-contractual liability, concluding that, considering the characteristics of the doctrine, it is not to be classified as contractual or tortuous, but as dritte spur, that is, opening up a third lane for liability between contract and tort. Accordingly, the prescriptive period for pre-contractual liability should fall somewhere in between 2 to 5 years, the respective prescriptive periods for contract and tort, thus requiring legislative intervention. Furthermore, the term paper delves into the issue of interesse negativo, highlighting the significance of restricting pre-contractual damages to the expenses incurred in good faith, in anticipation of the conclusion of a contract which does not materialise.

While this judgment, being the first Maltese case to accept and apply pre contractual liability, is said to shape future cases, the lack of actions filed on the basis of pre-contractual liability is evidence that the implications of this judgment are not yet aware of. In order to remedy this and ensure clarity and consistency in judgments, the Civil Code should introduce a specific provision catering for pre contractual liability. Bearing in mind the importance of acting in good faith during negotiations, it is ideal that article 993 is amended to apply to pre-contractual stages.