Its contractual nature descends from a qualified social contact according to the recent judgment of the Supreme Court of July 12, 2016, n. 14188

  1. THE CASE

The case dealt with the conclusion of a service contract between a private individual and the contracting administration. Because the Ministry did not authorize the conclusion of the contract, no binding agreement was concluded, since the mere award of the public contract in favour of the other contracting party was not regarded as sufficient for the stipulation of the agreement.

The Public Administration, as a consequence of the annulment pronounced by the administrative court, had to compensate damages for the actual losses and lost profits suffered by the private contracting party.

According to consolidated case-law, the Public Administration’s precontractual liability is similar to tort liability in nature; as a consequence, the limitation period of the relevant action is of five years.

In the decision at hand, the Supreme Court instead construes the administration’s responsibility as a contractual liability that dervies from the so-called “qualified contact” between the parties in the phase preceding the conclusion of the final contract.

  1. THE LEGAL ARGUMENTS

The Supreme Court, in its decision, observes that less recent case-law has frequently qualified precontractual liability (not necessarily of the Public Administration) in terms of a liability which is contractual in nature. A similar construction lead to important practical consequences: firstly, the aggrieved party had to provide evidence of the defendant’s negligence or fraud; secondly, the limitation period for the action was of five years; lastly, the so-called “negative interest” had to direct the court is settling the damages.

After presenting less recent theories and after a historical and comparative overview, the Supreme Court reaches the most innovative part of the decision: using the concept of “qualified social contact” as a starting point, the Court ruled that precontractual liability is, indeed, contractual in nature. The abovementioned social contact is, according to the Supreme Court, “a situation in which, as a result of the relationship established between the parties and as a result of the consequent reliance that both parties place on each other’s good faith, fairness and professionalism, obligations of protection arise before and in addition to obligations of performance of the contract.”

After this introduction, the Court construes the relationship between two parties, who have not yet concluded a contract but between whom there is a qualified relationship (characterized by reliance), as a “binding relationship with an obligation of performance”. In short, the so-called qualified social contact creates, on the basis of the reliance of the parties, obligations of protection and information that the parties must observe, even if they haven’t concluded a contract; the failure to observe such obligations, that causes damage to one party, generates a contractual type of liability for the other.

The innovation, therefore, lies in the use of the concept of “qualified social contact” to justify the contractual nature of precontractual liability.

  1. LEGAL PRINCIPLES

The Supreme Court focused on two legal principles.

  1. With regard to the contracts concluded with the Public Administration, “the binding effects for the parties […] are subject to the final ministerial approval […] so that, for the purposes of the conclusion of the contractual agreement, even if the latter formally exists, a mere award of the contract pronounced in favour of a private individual is not sufficient, nor is the formal conclusion of a contract subject to public procedures, in the form prescribed by the law.”
  2. With regard to a possible responsibility on the Administration’s behalf, this responsibility “has to be consequently construed as a precontractual liability, pursuant to Arts. 1337 and 1338 of the Italian civil code, and categorised as a contractual liability originated by a “qualified social contact”, which is a fact that can generate obligations, pursuant to Art. 1173 of the civil code, and that does not lead to not obligations of performance pursuant to Art. 1174, but, on the other hand, leads to reciprocal obligations of good faith, protection and information, pursuant to Arts. 1175 and 1375, with the consequent applicability of the ten-year long limitation period, pursuant to Art. 2946.

The Court, by deviating from its previous case-law, thus gave a positive answer to the query of whether “a contractual liability can be grounded, even if there is no agreement, from which specific obligations of performance arise, if, however, a relationship qualified as ‘qualified social contact’ is established between the parties.”