Chapter 15 Guidance on answering the questions in the book

1 ‘One of the main obstacles to the recognition of good faith is that there is no agreement as to what it means and what it would require.’ Discuss.

See 15.1 The meaning of good faith

15.4 The nature of good faith

2 Should English law recognise a duty of good faith in contract law?

See 15.2 Should English law recognise a general doctrine of good faith?

Note the pros and cons, and discussion of the validity of each.

What is your view? Start with this and give your reasons.

3 To what extent do you agree with this statement?

‘In many civil law systems, and perhaps in most legal systems outside the common law world, the law of obligations recognises and enforces an overriding principle that in making and carrying out contracts parties should act in good faith. This does not simply mean that they should not deceive each other, a principle which any legal system must recognise; its effect is perhaps most aptly conveyed by such metaphorical colloquialisms as ‘playing fair’, ‘coming clean’ or ‘putting one’s cards face upwards on the table’. It is in essence a principle of fair and open dealing. … English law has, characteristically, committed itself to no such overriding principle but has developed piecemeal solutions in response to demonstrated problems of unfairness. … Many examples could be given. … [These] may yield a result not very different from the civil law principle of good faith.’

(Bingham LJ in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1989))

See 15.5 The taxonomy of good faith

This gives you:

  • the three demands of good faith: honesty, fair dealing, and fidelity to the contractual purpose;
  • how each of these applies with increasing intensity depending on the type of contract made between the parties: (i) arm’s-length, (ii) symbiotic (relational), (iii) recognised inequality of bargaining power, and (iv) fiduciary relationship; and
  • how the applications are expressed via existing doctrines.

This contrasts with any duty of good faith expressed as a direct cause of action, or in new doctrines.

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