The First Chamber of the Supreme Court, after quashing on its own motion the second-instance judgment and issuing a replacement judgment on May 22, 2026 (Docket No. 9,210-2025), established that withdrawing in an untimely and unjustified manner from an advanced negotiation can generate civil liability — but limited to the negative interest: the expenses the counterparty incurred trusting that the contract would close. The lost profits for the projected return of the business were left out. It is positive interest, proper to the concluded contract, not to negotiations that never became one. If your company negotiates real estate acquisitions, distribution contracts, joint ventures, or long licensing arrangements, this boundary defines your exposure when one of the parties pulls out.
What happened
A real estate company negotiated for months with a partner of the company that owned two plots of land in Concepción, to build a housing project there. Between August and November 2018 there were emails, calls, and meetings. On November 21, the plaintiff sent an offer letter for the purchase at 33 UF per square meter over an approximate area of 1,234.14 m². The next day, the counterpart expressed agreement and commissioned the preparation of the promise of sale.
On November 28, that same partner aborted the negotiation by email, invoking a better offer from a third party. Nine days later, the owning company was dissolved. In February 2019, the properties were registered in the name of two of the defendants — the siblings who controlled the company — in equal parts. The sale to the alleged third party never materialized.
The plaintiff claimed compensation of 40,000 UF of lost profits (the projected return of the real estate project) plus 6,600 UF for consequential damage (architecture, calculation, legal advice, and real estate management fees). In the first and second instances the claim was rejected: the courts found that the acceptance had been conditional and, therefore, consent had not been formed; the Court of Appeals also added an argument regarding the lack of sufficient representation of the person who acted on behalf of the owning company.
The Supreme Court quashed the judgment on its own motion for internal contradiction. One cannot recognize the applicability of precontractual liability and, at the same time, require that consent have been perfected — because then the liability would be contractual. In the replacement judgment, it partially upheld the claim and jointly and severally ordered the defendants to pay $4,103,063 for consequential damage. It rejected the rest.
What it may mean for your company
The Court treats precontractual liability as a particular category within the tort regime. Its particularity is marked by recital 3 of the replacement judgment: unlike the common quasi-tort, it is not configured between strangers, but between those who, "motivated by the interest in concluding a contract, enter into a relationship with a view to its eventual conclusion." That relationship has a technical name — "business contact" —, and although it does not yet generate contractual rights or obligations, it does impose "duties of conduct of loyalty, collaboration, and reciprocal protection" from the very beginning of the negotiations.
The applicable regime is that of articles 2314 and following of the Civil Code (tort liability), not that of articles 97 to 109 of the Commercial Code on the formation of consent. The normative source of those duties is the objective good faith of article 1546 of the Civil Code, which the ruling projects from the opening of the negotiations until the close — or the frustrated close — of the contract.
The offense, says recital 7, consists of "the betrayal of the trust generated in the counterparty during the course of the negotiations." And the requirements, listed cumulatively in recital 9, are four:
"the creation of a legitimate trust in the conclusion of the contract, the unjustified character of the withdrawal, the existence of a damage, and the causal relationship between this and the betrayed trust."
The formula is not new. The Court has been applying it at least since Dockets No. 1,872-2010 and No. 32,714-2018, cited in the same recital. What the May 2026 ruling contributes is clarity on the compensation ceiling.
That ceiling is the operative point. The Court expressly excludes the positive interest — the return you would have earned if the contract had been concluded — because that is the damage proper to contractual liability and here there is no contract. Only the negative interest is compensated: the costs the counterparty incurred trusting that the business would close. In the case, the plaintiff lost the 40,000 UF of lost profits. And of the 6,600 UF of consequential damage claimed, it only recovered $4,103,063 — the legal fees proven through invoices and witness evidence during the negotiation period. The architecture, calculation, and market-study expenses were left out for lack of proof of effective payment or of a direct causal relationship with the frustrated negotiation.
There is an important nuance. Negotiating in parallel with a third party is not in itself unlawful — in the absence of an exclusivity agreement, that conduct is permitted. What activates liability is the combination of circumstances: concealing the parallel negotiations, ignoring the counterparty's insistence on resuming the business, and, above all, invoking a cause of withdrawal that is later not verified in the facts. In this case, the third party's "better offer" never materialized: nine days after the cut, the company was dissolved and the properties ended up awarded to those who had participated in the negotiation.
Could you prove today, with invoices and payment records, the expenses of your last relevant negotiation? Schedule a session to review how you document your negotiations and support the negative interest.
What you can do
If your company negotiates operations of a certain volume — acquisitions, joint ventures, distribution contracts, licensing —, the boundary between what is permitted and what is compensable is defined by traceability and coherence. Three concrete actions:
- Document the progress of the negotiations with a clear chronology. Archived emails, meeting minutes, signed term sheets, instructions to lawyers, architects, or external advisors. In the precontractual stage, reasonable trust is proven by the degree of objective progress of the negotiations. That same documentation also supports you if you need to defend a withdrawal.
- Keep the expense receipts linked to each negotiation. Invoices, receipts, service-provision contracts, and proof of effective payment. The ruling discarded relevant items for lack of evidence of payment, not because the expenses had not been made. Without accounting support, the claim for negative interest dies before it begins.
- If you decide to withdraw from an advanced negotiation, do so with an explicit and traceable cause. Objective good faith does not oblige you to contract, but it does require that the reason for the withdrawal be real and verifiable. If you invoke a cause that later does not materialize — or that contradicts your subsequent conduct —, the withdrawal ceases to be the free exercise of contractual freedom and becomes a fact generating liability.
If any of these points raises questions regarding an ongoing negotiation or a recent withdrawal, a 30-minute diagnostic session is enough to size up your exposure. Schedule here.
If you need to assess the risk of an ongoing negotiation, review your processes for documenting negotiations, or structure the withdrawal from an advanced operation, schedule a meeting with our team.
This content is informational and does not constitute legal advice.