European Business Law Review

Volume 23 (2012)

Volume 23 (2012) / Issue 3

Alain Couret, Bruno Dondero, 'The Breaking Off of Negotiations in M&A Operations: Comparative Approach' (2012) 23 European Business Law Review, Issue 3, pp. 347–373


The breaking off of negotiations does not affect only transfer of companies' ownership operations. Nevertheless, when the breaking off occurs in that particular case, it often implies dramatic consequences. The sudden withdraw from the table of negotiations of the only possible buyer - or at least the person seen as such - may cause a complete stop of the company's activity for a more or less long time.

The hereafter comparative study shows that, in the negotiation context, the duties that the parties must abide by have different sources according to countries. Therefore, the breaking off can be assessed either on tortious liability ground, on breach of contract ground, or even on the basis of an autonomous legal mechanism. The question is commonly addressed under European countries' law systems. However, the question also deserves to be discussed in Common Law countries: even if the latter system refuses to draw legal consequences from a situation which is not yet contractual, the truth is that the Common Law systems are not completely indifferent to the breaking off of negotiations.

When it comes to compensation, even if various legal basis are admitted, the results of damages claims remain modest. The judicial practices of the countries that admit the possibility of compensation actually reveal that the scope of such compensation is always limited. Thus, it appears that compensation for the loss of a chance to sign the contract is universally rejected, and that only damages which are certain, such as negotiation fees and harm to reputation, are taken into account. The loss of a chance to enter into a contract with a third party can occasionally be compensated.

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ISSN: 0959-6941
ID: EULR2012020