Good faith in contract law : a comparative analysis of English and German law

• Main Author: Sims, Vanessa Karin
• Published: University of Cambridge 2003
• Subjects: 346.41022
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.444741

The concept of good faith has an important role to play in English contract law, where the elements necessary for its recognition already exist. Nevertheless, the issue has divided the contract community. Although there is strong support for the recognition of such a concept, it is more often rejected on the basis that it would be, at best, unnecessary and, at worst, a serious disruption of contract law. These arguments are correct to the extent that it would indeed be difficult, if not impossible, to transplant an existing continental version of good faith into English law. They fail, however, to consider the possibility of good faith developing organically within the common law, as an overarching principle integral to general law of contract that governs the performance of agreements. In preparation for the argument that the elements necessary for the recognition of a concept of good faith already exist in English law, the use of the term 'good faith' in contracts uberrimae .fidei and the Unfair Terms in Consumer Contracts Regulations 1999 is contrasted with, respectively related to, the present debate. The analysis then focuses on the implied term of mutual trust and confidence in employment law, which is identified as a functional equivalent to the German concept of Treu und Glauben. The subsequent extension of this comparison to terms commonly implied into commercial contracts culminates in the identification of the key elements of good faith. At one level, it ensures that contracts are performed as they were intended to be, by ensuring that the parties do not abuse contractual rights for an extraneous purpose; at another, it provides an instrument for the enforcement of policy considerations within the contractual framework. The central concern is always the balancing of interests - those of the parties, those of the community within which the parties are operating, and those of society as a whole. The elements thereby identified are more than capable of refinement into a coherent theory; this thesis commences the process of conceptual analysis and thereby takes the first step towards the recognition of a truly English concept of good faith.