The Concept of Good Faith
Martijn W. Hesselink
University of Amsterdam - Centre for the Study of European Contract Law (CSECL)
February 26, 2004
TOWARDS A EUROPEAN CIVIL CODE, A.S. Hartkamp, E.H. Hondius, M.W. Hesselink, C.E. du Perron & M. Veldman, eds., pp. 471-498, The Hague, Boston & London: Kluwer Law International, 2004
If the role of the judge as a creator of rules is fully recognised, there is no need for a general good faith clause in a code or restatement of European private law. It may even do harm because it gives the courts an excuse for not formulating the rule which they apply. If, however, there is still some doubt as to the power of the courts, a good faith clause could be useful in order to assure that the judge may create new rules. This may be of particular importance for a new code for Europe where the European Court of Justice and the other courts may need extensive powers right from the beginning. It would then be logical not to put the article in the chapter on contract law, but right at the beginning as one of the first preliminary provisions of the code, just like in Switzerland. The wording would not matter much; experience shows that any phrase containing the words 'good faith' will suffice. However, if good faith were to have only such an Ermächtigungsfunktion, it could be argued that it would be more straightforward instead of using good faith terminology to provide expressly that the courts may interpret, supplement and correct the code where necessary. It may be argued that for the sake of tradition the term 'good faith' should be used. However, since this term may lead to hostile reactions from common law lawyers (however unjustified) 'equity' may be an acceptable compromise, since it is part of both the civil law and the common law traditions. It is submitted, however, that this term has the disadvantage of having a strong natural law connotation.
Secondly, this paper shows that the concept of good faith in itself should not keep common law and civil law lawyers divided. On the one hand, common law lawyers should not fear the concept of good faith. The adoption of a general good faith clause in itself does not say anything about which rules will speak through its mouth. Good faith does not differ much from what the English lawyers have experienced with equity. The real question is whether the rules adopted by the courts mentioning good faith should be included in a European code or restatement. It does not make any more sense for a common law lawyer to fight the concept of good faith than it would have been to fight the whole of equity. Rather, good faith serves as a guarantee against the rigidity that the English fear from a code. On the other hand, civil law lawyers should not insist too much on including a good faith provision in a code or restatement of European private law. If they fully recognise what the courts do when they 'apply' good faith they should acknowledge that it should not be necessary that a court mentions the words 'good faith' when it creates a new rule which supplements or corrects the law. Common law lawyers do not believe that the law should be exclusively made by the legislator, nor do they consider it necessary that all the law should be democratically legitimated. This may largely explain why English law has not needed the concept of good faith.
Finally, this paper makes become clear that it is not possible to say anything on the 'content' of European good faith without knowing the system that it will be operating in. Ideally it should be empty. All the rules mentioned in Section III, for example, if accepted, could (and indeed should) be given their proper place in a code or restatement of European private law.
Number of Pages in PDF File: 31
Keywords: Good faith, European contract law, European law, contract law, adjudication, general clauses
Date posted: February 27, 2008 ; Last revised: April 8, 2011