Contracting Negligence Legal Issues

Liability for Contracting Default (i.e., Culpa In Contrahendo) is originated from the Roman Law and developed as an independent legal system during the middle of 19th century. Liability for Contracting Default is a civil compensation liability that a contracting party or the parties under a contact should be responsible for the loss of the reliance interest or inherent interest of the counter party if it or they breach the pre-contracting obligation under the principle of honest and good faith.After acknowledged by the legislation of the states which falls into the Continental Law System, Liability for Contracting Default has become to an important legal system in the area of contract law. The theory basis of the Liability for Contracting Default has been changed due to several identical characteristics with Liability for Breach of Contract and Liability for Tort. The purpose of the Liability for Contracting Default, by balancing the interests, is that the party who sustains loss due to the counter party's default could retrieve the status before the conclusion of the contract. The system of Promissory Estoppel under Common Law is similar with the Liability for Contracting Default. Although there are some differences between them, the purpose of both Liability for Contracting Default and Promissory Estoppel is to protect the reliance interest of the parties during the process of contract-concluding. Because our Contract Law adopts a legislation model under which the conclusion of contract is separated and differed from the effectuation of the contract, the protective area of the Liability for Contracting Default, instead of being limited within the process of conclusion of the contract, should expand to be the effectuation of the contract. Otherwise, it may lead to a"blank land"of the application of law. Moreover, there is a specific situation that Liability for Contracting Default may be also applied after effectuation of the contract. With regard to the compensation scope of Liability for Contracting Default, it should also include the inherent interest except for the reliance interest.Although our new Contract Law has already made detailed stipulations on the Liability for Contracting Default, there are still certain shortages on the provisions of pre-contract obligation, stylistic rules, compensation scope and coordination of the laws and regulation. Therefore, for further improvement of the Liability for Contracting Default, during the process of the judicial interpretation or the drafting of the Civil Code in China, the above-mentioned shortages should be amended or improved.