Good Faith in Precontractual Negotiations: A Franco-German-American Perspective

12 Pages Posted: 9 Nov 2006  

Omer Tene

International Association of Privacy Professionals (IAPP)

Date Written: November 8, 2006

Abstract

An offeror initiates negotiations to acquire a target company. The parties sign an exclusivity agreement, restricting them from dealing with third parties for a specified period of time. They execute a term sheet, laying out the principle terms of the contemplated definitive agreement, yet providing that the parties will be under no obligation to one another should they fail to strike a deal. After several negotiating sessions, the discussions break down and the offeror ultimately proceeds to acquire a different company. Can the target company sue the offeror for breach of good faith in negotiations, despite contractual safeguards in the preliminary agreements? Can it do so if there were no preliminary agreements? This article examines the bases for liability arising from unsuccessful contractual negotiations under United States, French and German law.

Keywords: mergers and acquisitions, acquisitions, mergers, exclusivity agreement, good faith, german, french, germany, france, term sheet, target, offeror

JEL Classification: K10, K12, K22, K33

Suggested Citation

Tene, Omer, Good Faith in Precontractual Negotiations: A Franco-German-American Perspective (November 8, 2006). Available at SSRN: https://ssrn.com/abstract=943383 or http://dx.doi.org/10.2139/ssrn.943383

Omer Tene (Contact Author)

International Association of Privacy Professionals (IAPP) ( email )

Pease International Tradeport
75 Rochester Ave., Suite 4
Portsmouth, NH 03801
United States

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