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Foundational Principles of Contract Law$
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Melvin A. Eisenberg

Print publication date: 2018

Print ISBN-13: 9780199731404

Published to Oxford Scholarship Online: October 2018

DOI: 10.1093/oso/9780199731404.001.0001

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The Principle of Good Faith in Contract Law

The Principle of Good Faith in Contract Law

Chapter:
(p.707) Fifty-Two The Principle of Good Faith in Contract Law
Source:
Foundational Principles of Contract Law
Author(s):

Melvin A. Eisenberg

Publisher:
Oxford University Press
DOI:10.1093/oso/9780199731404.003.0052

It is a settled principle of contract law that a contracting party must perform her contractual duties in good faith. The meaning of the duty of good faith is complex. At a minimum, to be in good faith an actor must have acted in a way that she believed was proper, which is a subjective test. This subjective test is overlaid with several objective tests. First, it is not enough that an actor actually believed that her conduct was proper; her belief must be honest in the sense that it has some basis in morality. Next, although an actor's belief need not be reasonable to be in good faith, it must at least be rational. Finally, the duty of good faith includes the observance of reasonable standards of fair dealing—another objective test.

Keywords:   good faith, honest belief, subjective test, rational belief, reasonable standards, fair dealing

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