Good faith
Audio titled: Audio recording 20.1

Good faith is a potentially huge topic and it's also quite an amorphous concept. So, it's quite hard to put a structure on the material that you could look at in the context of good faith, but it's always something that's discussed in English, commercial law and English contract law more generally. Because other systems of law recognise a general doctrine of good faith throughout the law of contract, or perhaps throughout private law more generally. Which is a general principle which is then applied in all number of instances. Whereas, the way that common law has operated is to work from individual cases and to build from the bottom up. So not to start with these general doctrines, such as good faith, but to start with discrete cases and buildingup principles from there. Which is why you have lots of doctrines in English law which you could put under an umbrella heading of good faith. So just the ones who've just looked at like misrepresentation, and duress, and undue influence, and unconscionable bargains, and the rules about incorporating terms into a contract. And perhaps even more generally are opposed to interpretation, and implication, and rectification are all to do with good faith. So, it's possible to conceive of good faith as existing in English law, indeed it does exist in English law, by us having a broad general input. But that's not what the positive law says, and that's not what the cases say. And you want to think about whether that would be advantageous for us to adopt wholesale a general doctrine of good faith. So, there's some pressure on trying to decide what good faith means. And I think it is clear that if the parties expressly stipulate that the contract should be performed in good faith then courts will give effect to that, because courts should give effect to the party's intentions. And then good faith will be interpreted in context and given a clear content. There's lots of debate at the moment about whether or not a term that a party should perform its obligations in good faith should be implied into a contract. And there's a tension between different approaches here. So, some commentators take quite an individualistic approach to contract law, where contracting parties only have to look out for their own best interests, and are very wary about imposing duties of good faith. Whereas others take a more paternalistic isn't the right word, but based on, you know, broader considerations of welfare, and in particular, a shift in the types of contracts that we see in a commercial litigation. So, a shift from your one-off contracts for the sale of particular goods, where the relationship between the parties ends with that sale, towards what has become known as relational contracts. So long-term contracts between parties which require a degree of cooperation between the parties, and flexibility in the course of a joint venture, for example. And so, there's a question about whether relational contracts is a category of contract which is sufficiently clear and certain that we can say that duties of good faith should be implied into this type of contract at law, or whether good faith should really only be implied in fact. And it's just that when you get these relational contracts you're more likely to find that such a term of good faith should be implied in fact. And I do think that there are difficulties about defining relational contracts with precision, but this is something which the courts are trying to work out at the moment in a number of cases. And I just think it's important to bear in mind that English law does not have a general doctrine of good faith, but has been incredibly successful commercially. Lots of parties choose English law to govern their contracts, even if they have no other link to England and English law. So, you might get a Japanese company contracting with a Swedish company and they might choose English law to govern their agreements. And they could choose other jurisdictions which do have good faith as a prominent characteristic of their law, and if they don't they choose English law. So, it's often said they choose English law because it's predictable, and certain, and pragmatic amongst other reasons. And you want to think about whether those features, so those assets might be undermined by a wholesale recognition of good faith. It might not be, but this is the tension and part of the debate that's going on at the moment.

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