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Good Faith Performance

57 Pages Posted: 20 Jan 2012 Last revised: 26 Mar 2013

Alan D. Miller

University of Haifa - Faculty of Law; University of Haifa - Department of Economics

Ronen Perry

University of Haifa - Faculty of Law

Date Written: January 20, 2012

Abstract

This Article aims to unveil and undermine one of the most resonant truisms in contract law. It shows that a dominant criterion used by courts and academics in applying the omnipresent and overarching principle of good faith is essentially flawed. Our argument is innovative in at least four respects. First, it uncovers a common denominator of the major accounts of good faith performance in case law and academic literature, namely resort to community standards. While not unheard of, this test has never been recognized or addressed as a unifying thread of the various theories. Second, the Article distinguishes two forms of community standards: common views of morality and common practice. This has never been done before in this context. Third, the Article fiercely challenges the common denominator by proving that all definitions of community standards are either theoretically unsound or impractical. This conclusion undermines the validity of judicial practice and contemporary legal theories. Fourth, the Article uses a novel theoretical perspective that can be labeled “axiomatic jurisprudence,” employing tools from a branch of economics known as social choice theory. In this respect, it follows up on our recent publication, which utilized similar tools to analyze the concept of reasonableness in tort law.

Keywords: Contract Law, Good Faith, Performance, Uniform Commercial Code, Restatement, Expectation Interest, Social Choice, Axioms, Community Standards, Interpretation, Law and Economics

JEL Classification: D71, D72, K12

Suggested Citation

Miller, Alan D. and Perry, Ronen, Good Faith Performance (January 20, 2012). Iowa Law Review, Vol. 98, pp. 689-745, 2012 . Available at SSRN: https://ssrn.com/abstract=1988914 or http://dx.doi.org/10.2139/ssrn.1988914

Alan D. Miller (Contact Author)

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 31905
Israel
+972-52-503-9259 (Phone)

HOME PAGE: http://econ.haifa.ac.il/~admiller

University of Haifa - Department of Economics ( email )

Haifa 31905
Israel
+972-52-503-9259 (Phone)

HOME PAGE: http://econ.haifa.ac.il/~admiller

Ronen Perry

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 31905
Israel

HOME PAGE: http://weblaw.haifa.ac.il/en/faculty/perry/

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