[I]n many civil law systems, and perhaps in most legal systems outside the common law
world, the law of obligations recognises and enforces an overriding principle that in making
and carrying out contracts parties should act in good faith. This does not simply mean that
they should not deceive each other, a principle which any legal system must recognise; its
effect is perhaps most aptly conveyed by such metaphorical colloquialisms as “playing fair”,
“coming clean” or putting one’s cards face upwards on the table”. It is in essence a principle
of fair and open dealing . . . English law has, characteristically, committed itself to no such
overriding principle but has developed piecemeal solutions in response to demonstrated
problems of unfairness.
It appears from the above dictum that in the common law, the principle of good
faith as an overriding principle has not been cast in concrete as in civil law
jurisdictions in relation to the law of obligations. Rather, in English law, it has
developed as piecemeal solutions to situations where unfairness has been evident in
the effectuation of contracts, namely, their performance and invocation of rights
under them.
41
Following the decision in Yam Seng Pte Ltd v. International Trade Corp Ltd.,
alluded to above, there has been rising interest and discussion among scholars and
the judiciary with regard to the duty of good faith in connection with commercial
contracts. It is apparently not considered by the courts to be totally alien to English
law.
42 Indeed, in fiduciary arrangements and employment contracts, English law
indubitably recognizes the application of the good faith principle although it is
contended in scholarly writings that these are simply piecemeal solutions to ensure
fairness in particular situations.
43 Notably, certain EU directives have virtually
compelled English courts to give requisite weight in their judgements to the notion
of good faith.
44 Some are of the unwarranted belief that the English law in this matter
is being increasingly isolated and that the future of good faith in English law is
somewhat dubious.
Compared with the loose position adopted in by English courts on the doctrine of
good faith, which is “swimming against the tide” in the words of Sir George
Leggatt,
45 the United States, Canada and Australia, have all recognised it positively.
In the United States, good faith has been recognised as a legal principle for over a
century and, as mentioned above, is entrenched in legislation. In Australia and
Canada as well, the principle of good faith in the effectuation of contracts is wellestablished. In Renard Constructions (ME) Pty v. Minister for Public Works,
46 a
1992 decision of the Court of Appeal of New South Wales, Priestley JA held that
good faith and fair dealing in the performance of contracts is the expected legal
41 See for example, Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd. [1988] 1 All
E.R. 348 at 353 (C.A.); See also Tetley (2004) para. VII, p. 13.
42 Tetley, ibid. at p. 28. Professor Tetley points out at pp. 6–7 that good faith has been an integral
part of society’s legal order since Roman law times.
43 Pugh (2018).
44 Tetley (2004), p. 28.
45 Leggatt (2016) para. 2.
46 (1992), 33 Con LR 72, 113, (NSWCA).
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S. Jia and H. Yu
world, the law of obligations recognises and enforces an overriding principle that in making
and carrying out contracts parties should act in good faith. This does not simply mean that
they should not deceive each other, a principle which any legal system must recognise; its
effect is perhaps most aptly conveyed by such metaphorical colloquialisms as “playing fair”,
“coming clean” or putting one’s cards face upwards on the table”. It is in essence a principle
of fair and open dealing . . . English law has, characteristically, committed itself to no such
overriding principle but has developed piecemeal solutions in response to demonstrated
problems of unfairness.
It appears from the above dictum that in the common law, the principle of good
faith as an overriding principle has not been cast in concrete as in civil law
jurisdictions in relation to the law of obligations. Rather, in English law, it has
developed as piecemeal solutions to situations where unfairness has been evident in
the effectuation of contracts, namely, their performance and invocation of rights
under them.
41
Following the decision in Yam Seng Pte Ltd v. International Trade Corp Ltd.,
alluded to above, there has been rising interest and discussion among scholars and
the judiciary with regard to the duty of good faith in connection with commercial
contracts. It is apparently not considered by the courts to be totally alien to English
law.
42 Indeed, in fiduciary arrangements and employment contracts, English law
indubitably recognizes the application of the good faith principle although it is
contended in scholarly writings that these are simply piecemeal solutions to ensure
fairness in particular situations.
43 Notably, certain EU directives have virtually
compelled English courts to give requisite weight in their judgements to the notion
of good faith.
44 Some are of the unwarranted belief that the English law in this matter
is being increasingly isolated and that the future of good faith in English law is
somewhat dubious.
Compared with the loose position adopted in by English courts on the doctrine of
good faith, which is “swimming against the tide” in the words of Sir George
Leggatt,
45 the United States, Canada and Australia, have all recognised it positively.
In the United States, good faith has been recognised as a legal principle for over a
century and, as mentioned above, is entrenched in legislation. In Australia and
Canada as well, the principle of good faith in the effectuation of contracts is wellestablished. In Renard Constructions (ME) Pty v. Minister for Public Works,
46 a
1992 decision of the Court of Appeal of New South Wales, Priestley JA held that
good faith and fair dealing in the performance of contracts is the expected legal
41 See for example, Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd. [1988] 1 All
E.R. 348 at 353 (C.A.); See also Tetley (2004) para. VII, p. 13.
42 Tetley, ibid. at p. 28. Professor Tetley points out at pp. 6–7 that good faith has been an integral
part of society’s legal order since Roman law times.
43 Pugh (2018).
44 Tetley (2004), p. 28.
45 Leggatt (2016) para. 2.
46 (1992), 33 Con LR 72, 113, (NSWCA).
322
S. Jia and H. Yu