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The liability provided for under art. 1337 of the Italian Civil Code where negotiations are broken off in an unjustified manner may also occur where contractors’ breach their duty of loyalty to each other, which consists in a duty of full disclosure about the real intention to conclude a contract (without any change in circumstances legitimizing a contractor’s reticence or malicious omission of relevant information during the course of negotiations aimed at concluding a contract).

This was established by the Supreme Court with its judgment no. 6526 handed down on April 26, 2012, which upheld the appeal of a (former) employee of an insurance company who complained about the misbehavior of an acquaintance who had suggested the possibility of becoming both agents of another company, creating for such purpose a special vehicle company that would act as the agent.

As is clear from the facts of the case at hand, the parties had entered into a preliminary agreement which had set a deadline for the establishment of the company, which had expired because of a change in the defendant’s attitude which had, in fact, prevented the establishment of the said company.

The trial courts had rejected the plaintiff’s claims, taking into account the fact that, in this case, the agreement in question did not contain the essential elements for the conclusion of a definitive agreement and that, in any case, there had been no unjustified failure of negotiations.

The Supreme Court took a different view. It stated that, despite the parties’ right to judge whether it was convenient for them to execute the agreement or to withdraw from the negotiations without giving any justification (cfr. Supreme Court judgment no. 5297 dated May 29, 1998), the negotiations must still be marked by the principle of good faith and fair dealing (intended, among other things, as the duty to inform the other party about whether there is the real possibility of executing the agreement, without omitting any circumstances that are significant for the purposes of the contract itself).

This principle refers not only to the situation in which negotiations are broken off without justification, but is also a general principle that implies a duty of the parties to deal fairly (refraining from malicious or reticent behavior) and give to each other, with the utmost care, all relevant data – which is known or knowable – for the purpose of entering into the contract (cfr., in particular, Supreme Court judgment no. 15040 dated August 5, 2004 and, more recently, Supreme Court judgment no. 24795 dated October 8, 2008, based on the principle stated in  Supreme Court judgment no. 26725 dated December 19, 2007).

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