PRE-CONTRACTUAL LIABILITY OF THE BANK FOR FAILURE TO STIPULATE A LOAN CONTRACT. 

THE DISTRIBUTION OF THE BURDEN OF THE PROOF

With ordinance no. 27262/2023 of 09.25.2023, the third section of the Supreme Court expressed its opinion on the subject of pre-contractual liability of the bank for failure to stipulate a loan contract, despite the advanced stage of the negotiation.

Generally speaking, pre-contractual liability or culpa in contrahendo represents a form of liability arising from failure to comply with the obligations incumbent on the parties during negotiations and the development of the contract.

Violation of the aforementioned obligations can lead to various consequences: the failure to conclude the contract (in the event of unjustified withdrawal from the negotiations), the conclusion of an invalid or ineffective contract, finally, the stipulation of a valid, effective, but not convenient contract.

Key Elements of Pre-contractual Liability in the Italian legal system

Pre-contractual liability, governed by article 1337 of the Italian Civil Code, focuses on four fundamental elements that must be satisfied in order for it to be legally detectable:

1) Concrete and Significant Negotiations: To trigger pre-contractual liability, concrete and significant negotiations must have been started between the parties involved. These negotiations must have reached a stage that objectively justifies confidence in the conclusion of the contract; we are not referring to informal conversations or simple intentions but to actual negotiations.

2) Reasonable Expectation: The party who intends to assert pre-contractual liability must have reasonably trusted in the conclusion of the contract, based on the ongoing negotiations, this means that reasonable expectation must have arisen on the part of the injured party, who had well-founded expectations on the contract stipulation.

3) Unjustified interruption of negotiations by the person to whom the pre-contractual responsibility is attributed. This is to say that the responsible party has decided to terminate the negotiations without any valid reason, it is not enough to withdraw from the negotiations arbitrarily but there must be a legitimate justification.

4) Fault or Bad Faith: In the event of an unjustified interruption, the behavior of the responsible party must have been determined, if not by bad faith, at least by fault. This means that the responsible party must have acted negligently or incorrectly. Bad faith represents a more serious degree of behavior, but the fault is sufficient to constitute a pre-contractual liability claim.

Once these elements have been satisfied, pre-contractual liability can lead to significant legal implications. The party who has suffered damage due to the unjustified interruption of negotiations has the right to request compensation for damages, which may include both emergent damages, i.e. those directly related to the action, and non-pecuniary damages, such as those related to image and reputation.

It is important to underline that the power to evaluate the specific facts and key elements of pre-contractual liability lies with the judge of merit. This means that the judge has the authority to evaluate the evidence and specific circumstances of the case. His decision is unquestionable in terms of legitimacy, unless there are illogical defects in the reasoning.

Each pre-contractual liability situation is unique and must be assessed in light of the particular circumstances of the case. The parties involved must gather adequate evidence and fully understand the elements required to demonstrate pre-contractual liability.

As regards compensation for damages in pre-contractual liability, the topic is complex and involves various legal opinions. On the one hand, according to prevailing jurisprudence, compensable damages are limited to negative interest, which includes losses due to having invested resources in negotiations for a contract that was never stipulated or ineffective.

On the other hand, it is believed that differential interest should also be considered, which covers the prejudice resulting from the stipulation of a contract with conditions different from those that would have been negotiated in the absence of bad faith on the part of the other party. The decision on the type of compensation often depends on the specific legislation and case law of the country in question.

In our case, although the negotiations between the parties for the conclusion of a loan contract had reached such an advanced stage as to have generated legitimate expectation in the customer on the conclusion of the contract, they were then interrupted by the credit institution without a justified reason.

In accepting the appeal of the banking user, the Supreme Court gave concrete application, also in the context of banking relationships, to the general principle established by the article 1337 of the Italian Civil Code, which presupposes first of all that: “negotiations have taken place between the parties which have reached such a stage as to objectively justify the reliance on the conclusion of the contract, furthermore that one of the parties has interrupted the negotiations, evading the reasonable expectations of the other, the which, having trusted in the final conclusion of the contract, was induced to incur expenses or to give up more favorable opportunities, and finally that the withdrawal was determined, if not by bad faith, at least by negligence, and is therefore not supported by a just reason . The verification of the existence of these conditions requires an assessment of fact, reserved, as such, to the judge of merit, the assessment of which is inexcusable in the context of legitimacy if free from defects of illogicality of the motivation”.

It was further underlined that the withdrawal or suspension of negotiations, whether it comes from a private entity or a public administration, can be the cause of pre-contractual liability when there is no justified reason, the verification of the existence of which is reserved to the judge of merit and it can be censored in cassation due to logical or legal defects in the reasoning.

From the point of view of the distribution of the burden of proof, the Supreme Court established that pre-contractual liability, deriving from the violation of the rule of conduct established by the article 1337 of the Italian Civile Code constitutes a form of non-contractual liability to which the relevant rules regarding the distribution of the burden of proof must be applied.

Therefore, if the details of the illicit behavior are integrated by the unjustified withdrawal of a party, the person withdrawing does not bear the burden of proving that their behavior corresponds to the canons of good faith and correctness, while the other party is instead burdened with the burden of demonstrating that the withdrawal goes beyond from the limits in question.

Finally, the ruling in question takes a sideline position on the issue of financial damage resulting from improper reporting to the Risk Center of the Bank of Italy. The latter can also be proven by the injured party through presumptions, which could consist, if an entrepreneur, in the worsening of his commercial reliability. It could lead also some problems in obtaining and maintaining financing, with infringement of the right to operate on the market according to the rules of free competition and greater difficulty in accessing credit.

author: Dott. Federico Benedetti