In business practice, negotiations are often treated as informal and non-binding. Parties discuss terms, exchange drafts, and explore potential deals without assuming that legal consequences may arise at this stage.

Under Kosovo law, this assumption is only partially correct.

While negotiations themselves do not create a binding contract, they are not entirely without legal effect. In certain situations, the way negotiations are conducted can give rise to liability, even if no final agreement is ever signed.

In practice, this becomes relevant where one party enters into negotiations without a genuine intention to conclude the contract. If a party engages in discussions, encourages reliance, and then withdraws without a justified reason, this may result in liability for the damage caused to the other party.

A similar issue arises when negotiations are conducted in a way that creates legitimate expectations. Businesses often invest time, resources, and internal capacity based on the assumption that an agreement will be reached. When one party withdraws abruptly, the question is no longer whether a contract exists, but whether the other party has suffered a loss that should be compensated.

From a practical standpoint, this is particularly relevant in commercial relationships involving larger transactions, long negotiation processes, or repeated dealings between the same parties. The more advanced the negotiations, the higher the expectation that the agreement will be concluded.

Another important aspect is the manner in which negotiations are terminated. Kosovo law does not prevent a party from withdrawing from negotiations. However, withdrawal must be done in good faith and without causing unnecessary harm. Abrupt termination without justification, especially after prolonged negotiations, may expose the withdrawing party to claims for damages.

In practice, many businesses are not aware of this risk. Negotiations are often handled informally, without clear documentation of intent, limitations, or conditions. This creates uncertainty and increases exposure, particularly when one party has already taken steps in reliance on the expected agreement.

It is also common to see preliminary documents such as draft agreements, emails, or informal confirmations being treated as “non-binding”, while in reality they contribute to the overall assessment of the parties’ conduct. In certain cases, these elements may be used to demonstrate that one party acted without genuine intent or in a manner that caused damage to the other.

In practice, the safest approach is to treat negotiations as part of the legal process, not as a risk-free phase. Clear communication, defined expectations, and proper documentation can significantly reduce exposure.

Negotiations may not create a contract — but they can still create liability.

If you are involved in ongoing negotiations or a dispute arising from a failed deal, you can contact my office to assess your legal position under Kosovo law.

* This article is provided for general informational purposes only and does not constitute legal advice. It should not be relied upon as a substitute for professional legal consultation. For advice tailored to your specific situation, please contact my office directly.