In this blog we would like to discuss what the options are if one of the parties decides to break off the negotiation, at a stage where this is no longer optional. Then the disappointed party can do two things. He goes to court and chooses either a claim for further negotiations or a claim for damages.

Despite the principle of freedom of contract, you often cannot simply end a negotiation. It is important to ensure that you keep your hands free for as long as possible. We discussed this in the blog "Break off! Is that possible?" An important concept was the “legally relevant trust” that could have arisen in the other party that a deal will be reached.

In the blog "Divide, tell (or not) and conquer" we then talked about how that rights-relevant trust can arise. The whole of what you want to agree on was divided into essentialia, naturalia, accidentalia and white spots Make sure that you are at least clear about which topics belong to which category and determine to what extent it is useful to be explicit about this to the other party.

And now you are in a situation where the other party says: break off! What’s next?

You can opt for the claim for further negotiation. The party that broke off the negotiations must then come back to the table and start working seriously to reach an agreement. That party should not frustrate the negotiations in an attempt to lose that confidence again. For example, by returning to points that the parties had already agreed on, or by coming up with new requirements. There is still a catch: if the other party proposes an alternative scenario. For example, do not pay the entire purchase price immediately, but take out a vendor loan for part of it with a term of 5 years. If you show a willingness to investigate the alternative proposed by the other person, you may not be able to reach an agreement together, but that does not mean: going back to the original scenario and the rights-related trust that arose at that time. That is not how the law looks at it, and that is not how the judge looks at it. The situation is examined at the time that the contract negotiations are actually terminated. And then as a party that thought it was thinking along with the alternative scenario suggested by the other, you are suddenly confronted with a situation in which there is no longer any trust. Well, and now you have nothing more to demand!

In the case of compensation, the plaintiff hopes that the judge will compensate the party that wrongfully broke off the negotiations for the "positive contractual interest". This means that that party must put the disappointed party financially in the position that party would have been in if the negotiations had been successful, the contract had been concluded and had been properly executed. This also includes compensation for some lost profit!

Sometimes determining compensation is relatively simple. A house that should have been built has not been built, and that house has a market value that can be determined relatively easily. (Oops, don't let an appraiser read that ) In the case of the sale of shares in a company, it is a lot more difficult. What would those shares be worth if the forecast growth is achieved and in 5 years...

Please note: once the compensation route has been chosen, the party that wrongfully broke off the negotiations can no longer say: “Um, never mind, I will still execute the intended contract”. Unfortunately, that choice then lies purely with the disappointed party. No longer at the “destroyer."

Once that “legally relevant trust” has been established, is there no way to get out of an impending agreement? Yes, this is still possible under special circumstances. Then it either concerns unforeseen circumstances that are not within the sphere of risk of the party that terminates. E.g. a terrorist attack, a natural disaster. That will not be an issue in our region anytime soon. Or there is a lack of trust in the development process. E.g. because the parties still arrive at a point on which they appear unable to reach agreement, even though this is very important for both or one of the two. Then that trust may disappear again. If that happens, the parties still have the freedom to break off the negotiations.

And what does this mean for practice? That if you have to acknowledge in your heart that a “legally relevant trust” has been created with the other person, but you still want to get rid of that agreement, then you have to think very smartly about how you maneuver to see whether that will still work...