The pre-contractual phase of the acquisition of a company or merger of companies typically begins with the first contact between the parties and ends in the best case scenario with the conclusion of the contract. This phase plays a vital role for the wellbeing of the transaction: parties reach various, usually non-binding, but possibly also legally binding preliminary agreements at this stage, from which, possible claims for performance or damages can arise.
Often a ‘due diligence’ is already carried out during this stage, which can serve an important function in the context of warranty claims. Even if the parties have not concluded legally binding preliminary agreements, ‘pre-contractual party obligations’ already arise under Turkish law. Thus, the negotiating parties to an M&A deal bear the risk of being held liable for ‘culpa in contrahendo’, that is a legal principal in contract law for many civil law countries including Turkey, which stipulates the duty to negotiate with care before the contract is concluded.
