THE doctrine of culpa in contrahendo goes back to a famous article by Jhering, published in i86i, entitled "Culpa in contrahendo, oder Schadensersatz bei nichtigen oder nicht zur Perfektion gelangten Vertrdgen." ' It advanced the thesis that damages should be recoverable against the party whose blameworthy conduct during negotiations for a contract brought about its invalidity or prevented its perfection. Its impact has reached beyond the German law of contracts.
In Jhering's view, the German common law of his day, the socalled Gemeines Recht, was seriously defective in not paying sufficient attention to the needs of commerce. It did not adequately correct the will theory 2 and the meeting of minds requirement. To give some of his illustrations: a slip of the pen, an erroneous transmission of an offer or acceptance, an essential unilateral mistake as to the identity of the other party or of the subject matter, however impalpable, fatally affected the validity of the contract.
As a result a buyer, for instance, who inadvertently ordered ioo pounds instead of the intended ten was not liable to reimburse the seller for the costs of transporting the merchandise rejected. Furthermore, he argued, the prevailing view made it impossible for an offeree to rely on the perfection of the contract even if he had dispatched his acceptance because death of the offeror might have occurred or revocation of the offer might have been sent before the acceptance had become effective. Objective impossibility, finally, even if known to the promisor, brought about the invalidity of the contract. These and other instances where a party by "lack
of diligence" had prevented the consummation of a valid contract persuaded Jhering to raise in a systematic fashion the question whether the "blameworthy" party should not be held liable to the innocent party who had suffered damages relying on the validity of the contract. His answer was in the affirmative. Of course, the party who has relied on the validity of the contract to his injury will not be able to recover the value of the promised performance, the expectation interest. But, he suggested, the law can ill afford to deny the innocent party recovery altogether; it has to provide for the restoration of the status quo by giving the injured party his "negative interest" or reliance damages. The careless promisor has only himself to blame when he has created
for the other party the false appearance of a binding obligation.' This is the meaning of culpa in contrahendo.4
As a result a buyer, for instance, who inadvertently ordered ioo pounds instead of the intended ten was not liable to reimburse the seller for the costs of transporting the merchandise rejected. Furthermore, he argued, the prevailing view made it impossible for an offeree to rely on the perfection of the contract even if he had dispatched his acceptance because death of the offeror might have occurred or revocation of the offer might have been sent before the acceptance had become effective. Objective impossibility, finally, even if known to the promisor, brought about the invalidity of the contract. These and other instances where a party by "lack
of diligence" had prevented the consummation of a valid contract persuaded Jhering to raise in a systematic fashion the question whether the "blameworthy" party should not be held liable to the innocent party who had suffered damages relying on the validity of the contract. His answer was in the affirmative. Of course, the party who has relied on the validity of the contract to his injury will not be able to recover the value of the promised performance, the expectation interest. But, he suggested, the law can ill afford to deny the innocent party recovery altogether; it has to provide for the restoration of the status quo by giving the injured party his "negative interest" or reliance damages. The careless promisor has only himself to blame when he has created
for the other party the false appearance of a binding obligation.' This is the meaning of culpa in contrahendo.4
(Friedrich Kessler and Edith Fine. CULPA IN CONTRAHENDO, BARGAINING IN GOOD FAITH, AND FREEDOM OF CONTRACT: A COMPARATIVE STUDY. Harvard Law Review, Volume 77, Jan. 1964, number 3.)
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