The Doctrine of Precontractual Liability

Under the principle of freedom of contract, when two parties begin contract negotiations, they are under no obligation to actually arrive at an agreement and each one carries the risk for its own expenses and losses caused by the negotiations. However, even if the main rule says that each party bears the costs it might have incurred during the negotiations, if the parties do not reach an agreement, in rare cases it may, nevertheless, be sound, from both a commercial and legal point of view, to transfer the responsibility for these costs the other party. This follows from the doctrine of precontractual liability which is a special doctrine in contract law.