Freedom of contract
Article 5.14 anchors the principle of freedom of contract. According to article 5.14, outside the cases provided for by law, everyone is free to decide whether he/she is willing to enter into a contract or not and to choose his/her counterparty, without having to justify the reasons for this choice. Moreover, the parties are free to determine the content of their contract, as long as it meets the validity requirements established by law.
Consequently, freedom of contract is situated at three levels. First, parties are free to decide whether, they wish to contract. Second, parties are free to decide with whom they wish to contract. Unlike public entities, they do not have to justify their choice in doing so. Third, parties are free to determine the content of their contract. All this, of course, subject to legal restrictions, e.g. restrictions arising from anti-discrimination laws, competition law, B2B or B2C laws, etc. Regarding the content of the contract, article 5.14 explicitly provides that the contract must meet "the validity requirements provided by law", which means, among other things, that it must have a lawful object and cause.
Freedom to negotiate
Article 5.15 enshrines the principle of freedom to negotiate. According to that principle, parties are free to initiate, conduct and terminate pre-contractual negotiations. However, in doing so, they must act "in accordance with the requirements of good faith." What exactly this means and whether the parties are effectively acting in accordance with “good faith” must be assessed on a case-by-case basis, taking into account all the concrete circumstances of the case.
Pre-contractual information duty
Article 5.16 imposes an obligation on the parties to adequately inform each other during the pre-contractual phase: they must give each other, during the pre-contractual negotiations, the information that the law, good faith and custom, in light of their capacity, their reasonable expectations and the subject matter of the contract, require them to give.
However, the Explanatory Memorandum confirms that there is no general obligation to inform: parties must also inform themselves and are not obliged to communicate all information to each other. They must only communicate the information required by law, i.e. the information which the law, good faith or custom require them to communicate to the other party. For example, a soil certificate or town planning information when selling an immoveable property, or the information required to be disclosed to consumers under the provisions of the Belgian Economic Law Code.
Moreover, the Explanatory Memorandum confirms that article 5.16 does not exclude that parties agree on the information to be disclosed during the negotiations, e.g. in the letter of intent, the heads of terms, etc.
Article 5.17 anchors the principle of pre-contractual liability. According to article 5.17, parties "may incur extra-contractual liability towards each other during pre-contractual negotiations. When negotiations are erroneously terminated, this liability implies that the injured party is placed back in the situation in which he would have been had no negotiations taken place. Where there was a legitimate expectation that the contract would be concluded without any doubt, this liability may include repair of the loss of the expected net benefits from the contract not concluded. The breach of an information obligation may lead not only to pre-contractual liability but also to the nullity of the contract if the requirements stipulated in article 5.33 are met."
Consequently, article 5.17 describes two cases of pre-contractual liability: the erroneous termination of negotiations and the breach of an information obligation.
Regarding the erroneous termination of negotiations, the Explanatory Memorandum confirms that the freedom to terminate negotiations remains the starting point and exceptions should be applied with great restraint. However, if there is an erroneous termination of negotiations, the one who erroneously terminates the negotiations is liable and is obliged to compensate the damage suffered by the injured party. When determining the compensation, in principle, only the “negative contract interest” (“negatief contractbelang” / “intérêt négatif”) is taken into account: the injured party must be placed in the situation as if he had never negotiated. In this sense, for example, costs incurred with a view to the contract negotiation and conclusion that have become useless are eligible for compensation. The loss of an opportunity to win a contract with a third party is also eligible for compensation. By contrast, expenses that are not causally related to the erroneous termination of the negotiations, for example expenses that would have been incurred anyway, are not eligible for compensation.
Exceptionally, the positive contract interest (“positief contractbelang” / “intérêt positif”) also qualifies as compensable damages, especially if the legitimate expectation was created that the contract would be concluded "without any doubt". In that case, the injured party is placed in the situation as if the contract had indeed been concluded, so that the damages then consist of the loss of the expected net benefits from the contract not concluded. Whether or not the contract would have been concluded "without any doubt" must be assessed on a case-by-case basis, taking into account all the concrete circumstances of the case. In our view, this is the case when the contract is fully negotiated and one of the parties withdraws completely unexpectedly and without reasonable justification.
Regarding the breach of an information obligation, article 5.17 emphasizes that this may not only give rise to extra-contractual liability of the one who breaches the information obligation, but also to (a claim for) the annulment of the concluded contract if the contract is afflicted with lack of will as set out in article 5.33.