Pre-Contractual Paradigms in Macau and PRC

Commerce is intense between PRC, Macau and Hong Kong. Should there be duties before a contract is formed between negotiating parties? Is it detrimental to the economy or does it encourage business by allowing for a greater degree of trust between players? The main purpose of this article is to illustrate through examples the breach of precontractual duties. This should allow for the drawing of a more intelligible line between the opposites of full contractual freedom and unacceptable behaviour, before contract formation. On one hand, most behaviours displayed during negotiations should not entail adverse legal consequences. On the other, this should not lead to a conclusion that harm can be inflicted on a counterparty. Some examples include mock negotiations, information duties, vitiating factors, sudden breakdown of negotiations, valid consequences of invalid contracts, misuse of confidential information, preliminary agreements, and the role of third parties employed by one party. Loyalty duties imply honesty in contract performance and tend to fall under contractual liability; Protection duties imply safeguarding life, limb and property regime and tend to fall under tort rules. Remedies gravitate around reliance interest but vary and should not be squeezed into a one-size-fits-all template. This article is anchored to the current legal landscape in Macau and Mainland China, but most concerns are global and hopefully these reflections can be found equally useful in other jurisdictions.