The Doctrine of Good Faith in Contract Law: A (Nearly) Empty Vessell?

Abstract:     
Empty Vessel explores both the positive and normative questions of what the contractually implied obligation of good faith does and should require of contracting parties. The Article attempts to assess and evaluate the ways in which courts are currently employing the good faith doctrine in contract disputes, as part of a larger project whose goal is to re-conceive and reinvigorate the private law doctrine of good faith as one that might assist in effecting the public law norm of equality. Empty Vessel identifies two dominant theoretical approaches to how to define good faith, which I refer to as the fairness (or, Restatement) and the economic (or, foregone-opportunities) approaches. Further, it argues that, to the extent courts have applied and/or referenced the economic and/or fairness models of good faith in their decisions, they have rendered the two approaches operationally and functionally indistinguishable by employing both approaches as analytical proxies for material breach. Empty Vessel is divided into three parts. Part I explains the good faith doctrine, and explores in some depth the theoretical differences between the fairness and economic approaches to good faith. By examining exemplary good faith decisions in the contexts of "vanilla" commercial contracting, commercial lending, contractor cases, and commercial real estate leasing, Part II argues that contemporary courts employ the good faith doctrine not as a truly implied contractual obligation, but as a rhetorical framework for analyzing underlying issues of what constitutes material breach. In conclusion, Empty Vessel argues that the good faith doctrine might be given new life in two different ways: first, vis-a-vis its applicability to bad faith conduct in contract formation and negotiation (presently the obligation applies only to the performance and termination of contract); and, second, with respect to performance and termination, vis-a-vis it's applicability in the employment context. While the scholarship relating to the former is quite rich, that relating to the latter remains relatively unexplored. As a result, I explore in other articles how good faith might be used in the employment context to remedy presently non-cognizable forms of discrimination.

Keywords: Good Faith, Breach of Contract

JEL Classifications: K12

Accepted Paper Series