Pre-Contractual Liability: German Contract Law Approach as Reference

Pre-contractual liabilities will arise if a party breaches his duties during negotiation. Yet, such liabilities are unenforceable under Malaysian contract law due to non-existence of a contract as a cause of action. Moreover, common law and equitable principles are also incapable of providing an effective solution to this issue. Hence, this study has analysed the approach undertaken by the German contract law as a source of reference in finding a solution to the issue. This is due to the fact that the German contracts law is more progressive and had earlier experience in the development of pre-contract liabilities. To achieve this objective, this doctrinal research applied content analysis method and data was collected by using library research technique. Besides, a critical analysis approach was used to search for any positive aspects from the German contracts law which could be adopted in reforming the current contract law. This study found that the German’ court has applied a doctrine known as culpa in contrahendo as a mechanism in solving pre-contractual dispute. This doctrine had been codified into the German Civil Code (Bürgerliches Gesetzbuch ‘BGB’) and is widely adopted by other civil law countries. Finally, this study proposes a reform to the Contracts Act 1950 to enable the doctrine be recognised in Malaysia. The findings of this study will enrich knowledge, fill the research gap in relation to pre-contractual liability in Malaysia, and further contribute to the corpus of knowledge in the society.