The Bona Fide Principle of Negotiating
Section 12 of the Contracts Act provides that “in negotiations leading up to the conclusion of a contract a person must act in an acceptable manner and in good faith.”
Negotiations must be conducted in good faith.
This matter, too, is trivial and based on the basic instinct of every person.
This is generally a type of mental state.
A tenant will not negotiate if he does not genuinely intend to rent the apartment in question. An apartment owner will not negotiate with several tenants at once, without informing them.
The landlord at the time of signing the contract after negotiating and agreeing on the wording of the contract, should not stipulate that he will sign the contract only if the tenant raises the rent. And vice versa.
Some will think that the clause only applies to situations in which negotiations were conducted and in the end no contract was concluded.
But this is not the case, the section also deals with cases where negotiations are conducted and a contract is concluded and after the conclusion of the contract one party claims monetary compensation for so that the negotiations were initially conducted by the other party, not in good faith.
Moreover, it is possible that one party will sue to cancel the contract with a claim for compensation as a result of the other party conducting the negotiations leading up to the signing of a contract in bad faith.
There may even be extreme cases of receiving subsistence compensation, as if a contract had been concluded, in the event that a party to the negotiation acted in bad faith, which thwarted the signing of the contract.