May 12, 2010

Good faith

In a continental Europe considered as a cornerstone of legal justice and equity, the “good faith principles are lighter when considered from a more Anglo-Saxon and especially British point of view.

Indeed the clarity and simple wording of a contract is a huge asset to its future enforcement and performance. The less subjective considerations there is the easier will it be to be understood.

The understanding of “good faith” has actually been a real problem in countries such as Germany or France, causing constant tensions with legislative and judicial institutions.

In France for example “good faith” is a general principle that can be seen in the Code Civil in the “effects of obligation section” as a general provision establishing the importance of the principle.

The article 1134 states that “agreement lawfully made must be performed in good faith” but even if this article is a very important victory for the defenders of justice against the rigour of the law, if we analyse more carefully this success we can see that the initial terms of the article presented in its previous version of the Code Civil stated that they must be “contracted and performed in good faith” (Discours rapports et travaux inedits sur le code civil, Frederic Portalis 1844, grandson of one of the redactor) the legislator smartly removed this extra power of appreciation in the hand of the judges, power those are still struggling to recover.

In the German BGB the principle is as well in a very important position article 242, so at the beginning of the “rights of obligation section”. Nevertheless the conflict legislator judge has been very harsh. Not only the terms “Treu und Gleuben” (almost good faith) are attached to customary practice, but when the jurist start using heavily the article (especially during Weimar’s republic inflation crisis where money value was dropping) legislators were trying to fight for a Nominalism. The 8th of January 1924 Walter Simmons Reichsgericht’s president with other magistrates declared that legislator couldn’t with his authority go against a consequence imposed by “good faith”

We can hope that the specific English way described by Bingham LJ in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd in 1989 is going to be a certain guarantee for justice and fairness.”(439) “English law has [...] no such an overriding principle (i.e. good faith), but has developed piecemeal solutions in response to demonstrated problems of unfairness...”.

Maybe European laws, such as directive 93/13 EEC (5/04/1993) will become the theoretical text overruling British law.

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