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Good Faith In English Contract Dealings

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Good Faith in English Contract Dealings


In civil law systems, "good faith" is regarded as a vital criterion in appraising and regulating
the act of contracting parties. However, "fair dealing" is used in common law of literature
rather than the first one. Considering the standards that control the structure and
implementation of contracts, it is said that the standards of good faith favours more on the
contracting parties where in both of them are expected to perform and take action in good
faith with regard to the negotiation of the two. The level and capacity of use of the "good
faith" principle depends from one civil law jurisdiction to another. This may also give way to
the perplexities in the sense of figuring out the fundamental nature and what grounds are
covered.
Critically, in English law, there is no precise rule that requires the contracting parties to
accept the term "good faith". However, there are cases in civil law systems that are
accomplished with good faith and have been gradually accepted in English law through a
different approach. Thus, it is generally said that English law, unlike the civil law, does not
recognise a general duty of "good faith" in the sense of fair dealing between contracting
parties.to help you with your studies. This is not an example of the work written by our
professional law writers.

The Principle of Good faith


Primarily, good faith originated from the Roman law that contributed to the strict law'
permitting the court to take responsibilities for the situation, fortifications and considerations
of being just. In other countries such as Germany, 'good faith' is related to the idea of 'Treu
und Glauben' which basically means 'fidelity and faith'. According to Whittaker et al (2000),
'Treue' depicts faithfulness, loyalty, fidelity, reliability; whilst 'Glaube' means conviction in
the sense of faith or reliance. These terms are implying loyalty and honestly for each
contracting parties. Consequently, it is not a legal rule with particular requirements to act as
such that needs to be evaluated.
Moreover, good faith requires a duty on the contracting parties to act accordingly not only in
Germany but also in Italian and French civil code. However, the French courts have not
given the principle of good faith to have the same value as the German courts do;
nevertheless, related results were acquired in France by application of a general theory of
abuse of rights, which is formulated accordingly, on good faith at the end of the 19th century
(Fabre-Magnan 1995). It means that the right of a party may be restricted or limited to some
degree if any cases of abuse of right will be present. A person is considered to abuse the right
of a party if he or she intends to harm another person and if the intentions contradict the
economic or social purpose of his conditions.

In the context, good faith is viewed in the conception of the obligation of the parties to
cooperate with the proceedings of the negotiations, being standards of honesty and integrity
and the conformity with the right conduct for the benefit of each party. "Good faith" should
be regarded for the most part of loyalty to the negotiation and dissenting the behaviour of
bad faith (Furmston et al. 1998).

Three aspects of the principle of good faith


The notion of good faith in contract law normally consists of three aspects, which are the
substantive, formal, and the institutional competence aspect (Auer 2002). Substantive aspect
depicts ethics on the contract through defining what duties arise in good faith. The formal
aspect is more on the arrangement appearing to be a bleary paradigm and the other one, the
institutional aspect highlights the idea of legal freedom and restriction in negotiation
according to open principles such as good faith (Wooldridge and Jennings 1995).
English law does not agree to the arguments amid a nonconformist idea of freedom of
contract and the opposing altruist duty. In addition, dissenting good faith is due to the danger
of judicial arbitrariness and the requirement for fair elasticity. There is no argument that the
said aspects are not fully valid to explain the role of good faith in European law, though it
appears to be clear. Thinking that one party has to be responsible for the interest of the other
party acquits the other contracting party from the similar responsibility (Galgano 1985).
Therefore, many responsibilities to inform imposed on one party discharge the other party
from informing itself on the same point and then shift the burden of evaluation from one
party to the other. Thus, doubts about the probability of providing the notion of good faith a
substantive meaning.
In common law countries, a significant rule that pervades its law as well as the civil law is
the freedom to choose whether to get or not into a contractual relations. This is also known as
"the positive freedom of contract" or an optimal way of having freedom over the contract
regulations (Cohen 1995). The parties have the option to make a binding contract depending
on their own conditions. Alternatively, "negative freedom of contract" reflects the freedom of
the parties from the responsibilities as long as a binding contract has not been finalised.
However, in the case of the country that practises civil law, the negative freedom contract
depends on the principle of good faith and other set of guidelines such as the abuse of right
and unjustified. Thus, it contradicts how English law regards the notion of good faith. Civil
law views the principle as an essential part of contract dealings and applies it to the standards
of legal jurisdiction.

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is not an example of the work written by our professional law writers.

English law
In English law, there is no rule that requires the contracting parties to negotiate with the
principle of good faith. However, this does not mean that the contracting parties have the full
freedom to do what they want with regard to their contract relations. The conventional
regulation includes the ruling out of coercion; too much influence and deception. In addition
to, English law allows each party to cancel the negotiation before the contract ends. The legal
responsibility for pre-contractual actions is only obligatory with the consideration of
particular situations like falsified depiction or careless actions (Lando and Beale 2000).
In the midst of eighteenth century, English common law accepted the principle of good faith
in contractual dealings. However, the contemporary views about good faith, it is not
important to the English law in the sense of making it as a principle. In legal systems, mostly
the law of obligations acknowledges and puts into effect an intervening principle that in
creating and execution of contracts, the parties should act with accord to good faith.
Although this may appear to be literal, this does not imply that the parties should not betray
the trust of each other (Slapper et al. 2008). It profoundly reflects playing fair in order to
build just with each contracting parties. It is in perfect example of the principle of fair
dealing. English law has despised the term good faith but they have set the rules of playing
fair when it comes to the contract dealings. It plays a relevant rule in measuring the honesty
of the persons involved in the contract (Zimmermann and Whittaker 2000a).

Fair Dealing
The term "fair dealing" is used more than the term "good faith" in many English literatures
because it is more clear, whilst "good faith" appears unclear to the legal councils. The term
"fair dealing" stands for the observance of fairness to common law legal councils in a
profound manner. It is vital to emphasise that the definition of "good faith" as an objective
test to lawyers is integrated with the principles of civil law. Thus, it is more acceptable in
terms of contract dealings if the term "fair dealing" is used as it provides a clearer view of the
proper acts that both the contracting parties should make (Steyn 1997).
In United States, the Uniform Commercial Code or the UCC gives a statement that contracts
entails an obligation of good faith in its implementation. In the UCC, good faith refers to as
the truthfulness in dealing with contracts integrated with the commercial standards of fair
dealing. Consequently, American and English law both agree that the obligation of good faith
is not applicable to contractual dealings.

Contractual Information in civil law systems


Disclosing information in civil law primarily depends on the negotiation of both parties. In
good faith, one party should not disclose any information about the other one without
consent (Kessler 1964). The contracting parties are bound to act in the interest of fair dealing
and the security of the negotiation because of good faith. Disclosure of information is
tolerable only if the other party is incapacitated or ignorant. If such instance is the reason
with the consent of the other party, the contract could be changed at any given point in time.

There are cases that contract may or may not pursue anymore. Cite the example of selling a
commercial land, but there comes a dilemma when the seller failed to notify that the land is
subject to be under the local office and make improvements for better use. This scenario is
not valid to cancel the contract because the land is still considered a commercial land. If the
transaction is made before the decision of the local office, the transfer then is valid and the
contract cannot be void.

Critical Analysis
Good faith in English law cannot be regarded as a legal justification for contractual dealings
considering the grounds discussed earlier. However, it still resides so a progression of
principles are still vindicated by the good faith principle even they have ratified in laws or
integrated in a conventional way. Other laws are no longer defensible after a short time by
good faith even if they are not codified. Good faith somehow reflects the ethical actions of
the contracting parties and still considerable to integrate with the legal systems in the
negotiation (Zimmermann and Whittaker p.676).
There is really an argument whether to accept or not the principle of good faith in contract
dealings. Good faith contains the substantive aspect but is restricted and covers a general
idea. The substantive aspect is integrated with the other two aspects and that is why its
principles are restrained. As such, in a contract dealing, a conclusion will reflect as an
application of the good faith principle in condition of its conformity to the open norm and
does not depend on other conventional standard (Harrison 1997). Facts about good faith
might seem to be vague and may contradict through the acts of good faith. The three aspects
are somehow based on the good faith principle but there arises a conflict in a certain level.
Good faith binds people in a way that ethical standards are taken consideration. It is only
recognised by the English law as a form of behaviour and not as a legal system to be applied
on the contract dealings. It is not legitimate enough to take responsibility on the interests of
the contracting parties.

Conclusion
Civil law systems might take the term "good faith" and apply it into contractual dealings but
not in a formal way. It is therefore agreeable that the English law does not recognise a
general duty of good faith in the sense of fair dealing between contracting parties. It is
justified that cases like these have to be supported by more judicial law systems. Since it
reflects a wide issue, it may somehow cause to outmode the concept and principles for the
solutions that are set to be in a more specific law. Good faith only acts as a guidance for the
contract dealings but cannot be integrated with the formal setting as law develops in due
time. In using this principle, it should be treated as a historical approach, but still yields
importance because disregarding the past cannot give the future a prolific solution.
Particularly, this notion gives reference for future use as law continues to expand and are
precisely codified. Thus, the use of good faith in contract dealings, specifically in English
law, is not acceptable but remains significant in each parties with regard to their actions and
negotiations.

Works Cited
Auer,M. 'Good Faith: A Semiotic Approach', ERPL 2002, 279 ff.
Cohen, N. Pre-contractual duties: Two freedoms and the contract to negotiate. In J. Beatson
and D. Friedmann, ed. Good Faith and Fault in Contract Law. Clarendon Press, Oxford,
1995
Fabre-Magnan, M. Duties of disclosure and French contract law: Contribution to an
economic analysis. In J. Beatson & D. Friedmann, Good Faith and Fault in Contract
Law. OUP, Oxford: 1995
Furmston, M., Norisada, T and Poole, J. Contract Formation and Letters of Intent, John
Wiley & Sons, Chichester, 1998.
Galgano, F. Diritto Privato. 3rd ed., CEDAM - Casa Editrice Dott. Antonio Milani, Padova:
1985
Harrison, R. Good Faith in Sales. Sweet & Maxwell, London, 1997
Kessler, F. and Fine, E. 'Culpa in contrahendo', Bargaining in Good Faith and Freedom of
Contract: A Comparative Study. Harvard Law Review 77(3):401-449, 1964
Lando, O. and Beale, H. Principles of European Contract Law - Parts I and II Combined
and Revised. Kluwer Law International, The Hague, London, Boston, 2000
Slapper, G; David Kelly (2008-07-15). The English Legal System. London: RoutledgeCavendish.
Steyn L.J., "Contract law: Fulfilling the reasonable expectations of honest men", (1997)
113 L.Q.R. at p. 438.
Whittaker, S and Zimmermann, R. Good faith in European contract law: surveying the legal
landscape.In R. Zimmermann and S. Whittaker, eds. Good Faith in European Contract Law.
Cambridge University Press , Cambridge, 2000
Wooldridge, M. and Jennings, N. Intelligent Agents: Theory and Practice. Knowledge
Engineering Review 10(2), 1995
Zimmermann, R. and Whittaker, S (a). eds. Good Faith in European Contract Law.
Cambridge University Press , Cambridge, 2000
Zimmermann, R. and Whittaker, S.(b) 'Coming to Terms with Good Faith', in Good Faith in
European Contract Law, pp. 676 ff.

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