Contracts are generally binding applications when it comes to business law in local and cross border transactions. In today’s world, it is not uncommon for contract negotiations to last for months.

Several meetings, renegotiations and regular correspondence are necessary.

It is not uncommon for costs to be incurred by one or both of the future contracting parties even before the contract is concluded.

Notary and lawyer fees to set up the contract, the purchase of materials or the hiring of workers to prepare for the execution or just the workload of the contracting parties can lead to significant costs.

Contractual provisions are found in various diverse regulatory legal frameworks of Cameroon and Central African Sub- Region.

Of course, if the contract is executed as intended, these expenses serve their purpose.

But if a contract that was thought to be certain does not materialize, they may become useless.

A loss is incurred. The question regularly arises in retrospect as to who is responsible for the damage if one of the parties breach the contract negotiations without cause and thus prevents a contract that was believed to be secure from being concluded.

Legal provisions Regarding Breaking Off Contracts without Cause.

In principle, Cameroon law creates the possibility of compensation for liability for damages even though the final conclusion of the contract failed to materialize.

Such compensation of liability for damages arise against the contractual partner’s default without prejudice of legal prosecution as stipulated in Article 18 of law n°2006/012 of the 29^th December 2006 stating general regulations of Partnership contracts.

The OHADA Uniform Act relating to General Commercial law in Cameroon also elaborates on compensation for damages in the event of a contractual breach of either parties to a transaction.

The Uniform act as stipulated in Articles 263to 266 provides for Compensation for interest and damages in the event of a contractual breach.

The law also provides for penalties for breach by both parties in the contractual relationship.

Moreover, general contracts of employment provide for compensation in an event of wrongful termination of the contract by either parties to the contract.

Such infringement of contracts as well as collective agreement are punishable by law subject to article 167 (5) of the Cameroon Labour Code.

When Can a Party to the Contract Be Liable for Damages.

The contractual regulatory provisions stipulate that the parties are generally entitled to refrain from concluding the contract until it has been completed.

At this point, the parties make any related expenditures at their own risk.

However, a party that rejects the conclusion of the contract without good cause can be found liable to reimburse damages in specific circumstances

This liability arises only if the conclusion of the contract can be assumed to be certain after the negotiations and one of the parties to the contract has made expenditures in reliance thereon.

In practice, it is regularly disputed and difficult to prove when a conclusion of the contract is considered certain or when a party, in an attributable manner, raises confidence in its conclusion.

Therefore, a memorandum of understanding or a letter of intent or a non-disclosure agreement is often used, which is a declaration of intent by both parties that they intend to conclude the contract in confidentiality to the facts of the contract

The memorandum of understanding proves that the parties are in negotiations.

Itusually contains a “no binding” clause, which states that the contents of thecontract bind neither party.

Still, itdoes not exclude the binding of consideration obligations and the binding ofresulting compensation obligations.

Exemption from Liability for Damages

The COVID19 pandemic has been theme a false majeure that took the world abreast.

Failureby parties in contractual mutual relationships to meet up with theirresponsibility could not be measured up for compensation as such failure weredue to circumstances beyond parties control.

This persay false majeure is an exemption where parties can’t be held responsible to compensate for damages in a contractual breach.

If you find yourself in a similar case or need help assessing possible liability under any contractual transaction, the lawyers at Neneng Law Office are at your disposal nationwide with expertise and experience in cases involving all aspects of pre-contractual obligations and liability

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