On The Principle Of Good Faith In American Contract Law

The principle of good faith is the fundamental principle in America contract law, specially stipulated by Uniform Commercial Code, adopted by each state, and Restatement of the Law Second-contracts, which has great impact on America Judicature. Hence its status is very important, and adopts substantially in the field of America contract law. The writer hopes to afford some reference to the development and control of Chinese market economic, through studying in the good faith. The writer finished this article after referring to much original materials in English and writings of specialists on the aspect. The first is the origin of good faith. Each state of United States has its own independent and relatively sufficient common contract law body. Before 1960s, only a few states admitted the general duty of good faith. Thereafter, Uniform commerce Code was drafted and accepted by each state of America, so its status was established. And Restatement of the Law Second-contracts moved further the duty of good faith.Although each state accepted the general duty of good faith, its definition and scope is complex. The writer lists several important concepts of good faith. Uniform Commercial Code prescribes: Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement. At the same time, it defines good faith as honesty in fact in the conduct or transaction concerned, and in the case of a merchant good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. The principle of good faith is accepted by each state with some small change. And Restatement of the Law Second-contracts prescribes: Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement. It affords three motives of good faith and fair dealing: Faith to agreed common intents; identical to expectation of another party; consistent with normal, fair, reasonable standard in society. Although it cannot control judicial activities of courts, judges might invoke or refer to the stipulation of Restatement of the Law Second-contracts, when prior judgment cannot definitely resolve the problems faced in judges. Professor Summers defines good faith as the action excluding the action inconsistent with usually normal, fair and reasonable standard in society. Professor Burton thinks that good faith is one party has independent right when makes contract, masters the opportunities existing at that time,explains the contract objectively and performs the contract in the expectation of both parties. Professor Farnsworth do not afford clear definition of good faith, but he thinks each party not only has duty not to do something to hinder or prevent the occurrence of the condition of his duty or prevent another party perform duty, but also has duty to take active and co-operative measures to gain the purpose of contract. Many courts judge according to Uniform Commercial Code, but when prior rule of decisions conflicts or are unspecific, courts will invoke viewpoint of scholars instead of viewpoint of decisions. Although good faith is abstract moral conception, substantial practice and experience tells us what good faith is and how to adopt it. And just its uncertainty gives the judge independent judicial right needed by justice judgment.The First is the good faith in the negotiation of contract. Whether imposes the duty of good faith in the negotiation of contract is in dispute. Because at this time can adopt the rules of false representation, duress and undue impress to deprive the benefits and rights of the false party. Especially, when the parties have an agreement to negotiate in good faith. But professor Farnsworth contends the agreement to negotiate in good faith should be believed it could invoke a latent compulsory duty to negotiate in good faith, but not a duty to attain a final agreement.The next is the good faith in performance and enforcement of contract. The conception that All contracts imply...