State of Good Faith in English Contract Law

The law of contract in many legal systems requires that parties should act in good faith. English law refuses to impose such a general doctrine of good faith in the field of contract law. However, despite not recognizing the principle, English contract law is still influenced by notions of good faith. As Lord Bingham affirmed, the law has developed numerous piecemeal solutions in response to problems of unfairness. This essay will seek to examine the current and future state of good faith in English contract law.

Good faith was described by Lord Bingham in Interfoto as “playing fair, coming clean, or putting one’s cards face upwards on the table.” It owes its origins to the law of equity and can be traced back to the case of Carter v Boehm , where Lord Mansfield first introduced it in insurance contracts: “Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing of the contrary”. Lord Mansfield attempted, but failed to extend good faith as a general principle in English law. Lord Hobhouse pointed in The Star Sea that Lord Mansfield’s equitable principle of good faith only survived limited classes of transactions as English law developed “preferring benefits of simplicity and certainty.” This was reasserted in Interfoto where Lord Bingham introduced piecemeal solutions, and further in Walford v Miles where Lord Ackner iterated the position that there is no overriding principle of good faith in English law as the “concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations… a duty to negotiate in good faith is as unworkable in practic...

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...trust and confidence, which implores for a doctrine of good faith. Hence, although the future of a general principle of good faith in English contract law may not be certain, a judicial movement is slowly gaining momentum to increase the steps towards its realization.

Having evaluated the current state of English contract law, mainly made up of piecemeal solutions, it can be seen that despite being satisfactory and doing its job, there still remain gaps within the law of contract where unfairness is not dealt with. Moreover, due to the ad hoc nature of those piecemeal solutions, the latter have often produced inconsistent justice and have manifested cases of unfairness. Hence, “a relatively small number of respected Justices have endeavored to draw attention to the fact that the application of a general principle might be useful and even necessary in English law.”