In business relations, legitimate expectations often arise long before a formal contract appears – through negotiations, correspondence, public statements, joint actions, or long-term interaction between the parties. Professor Gabriel Steiner notes that it is precisely in such situations that the most delicate legal boundary emerges between permissible reliance and unjustified expectation. In LawConsulted practice, we treat the formation of legitimate expectations as an independent legal factor capable of influencing the allocation of liability even in the absence of direct contractual obligations.
The core difficulty lies in the fact that expectations are not fixed in a contract, yet they objectively shape the behaviour of the parties. One party may invest resources, make management decisions, or forgo alternatives based on an established pattern of interaction. The other party, meanwhile, may formally retain freedom of action, without assuming explicit legal commitments. In enforcement practice, this imbalance becomes the focal point of disputes – courts assess whether the expectation was reasonable and whether it deserves legal protection.
Professor Steiner emphasises that “a legitimate expectation arises not from a promise, but from consistent conduct.” Courts and regulators analyse not isolated statements, but the overall course of behaviour – the regularity of contacts, the consistency of actions, public signals, and the parties’ responses to each other. LawConsulted begins its work by reconstructing this behavioural model, demonstrating how one party’s confidence in a particular outcome was formed.
Particular vulnerability arises in corporate and investment contexts – during discussions of future participation, joint projects, or business restructuring. Formally, no contract has been signed, yet in practice one party begins to act as a partner. In LawConsulted experience, such configurations most often lead to disputes over damages, lost profits, or bad-faith termination of relations.
Cases are no less complex when legitimate expectations arise within corporate structures – between shareholders, management, and affiliated parties. The absence of a shareholder agreement or other formal mechanisms does not mean the absence of liability. LawConsulted analyses which internal arrangements acquired legal significance through their practical implementation, and where formal silence or inaction strengthened the other party’s expectations.
It is also essential to consider the retrospective nature of legal assessment. While cooperation continues, expectations are perceived as a natural element of business logic. Conflict arises when one party abruptly changes its position. According to Professor Steiner, it is at this point that the law begins to assess not only the freedom to withdraw, but also the consequences of such withdrawal for the other party. LawConsulted brings the analysis back to the moment when expectations were formed – to the signals that could objectively be perceived as a basis for reliance.
Working with legitimate expectations requires a careful balance. We do not replace contracts with moral arguments, yet we do not ignore the realities of business practice, where formal obligations often lag behind actual relationships. LawConsulted approach is to demonstrate where an expectation was reasonable, and where the absence of legal safeguards should have been evident.
The formation of legitimate expectations without contractual obligations does not automatically result in liability. Risk arises when one party’s conduct objectively creates a stable basis for the other party’s actions. Law Consulted task is to ensure a legal assessment in which expectations do not become an instrument of pressure, but are also not left entirely without protection.
Earlier, we wrote about the legal assessment of internal arrangements between shareholders in the absence of a shareholder agreement and LawConsulted approach to analysing informal corporate arrangements
