Good Faith in English Contract Law (Analysis of the Precedents of the Supreme Court of England and Wales)

Abstract

In the civil legislation of the countries of the continental system of law, the basic principle is the principle of good faith. It is this principle that is the most significant and directly regulates the legal relations of the parties, especially in the law of obligations, even if there is no indication of it in the terms of the contract. In the English contract law, on the other hand, there is no principle of good faith. In the article, the author analyzes the practice of the Supreme Court of England and Wales on disputes arising from agreements that include a condition on the good faith behavior of the parties. Despite the lack of statutory enforcement of the principle of good faith in the English law, recent precedents suggest that English courts are increasingly finding that good faith conduct by the parties may not only be expressly stated in the terms of a contract, but may also be implied in the contract, albeit in a limited number of cases. In each specific case, the courts, taking into account the wording of the terms of the contract, determine the content of the concept of “good faith” in relation to a specific obligation (clause of the contract), without extending this principle to the performance of the entire contract as a whole. The English courts hold that the agreement of the parties is paramount and broader obligations will not be implied by default.