Good faith in CISG and English law Analyse and compare.

The concept of good faith in contract law, particularly within the frameworks of the United
Nations Convention on Contracts for the International Sale of Goods (CISG) and English law,
offers a fascinating lens for comparative legal analysis. While the CISG incorporates good faith
as a potentially broad and dynamic principle, English law historically lacks a general doctrine of
good faith, applying it in more limited and specific contexts. However, recent English case law,
notably Yam Seng PTE Ltd v International Trade Corporation Ltd and Bristol Groundschool Ltd
v Intelligent Data Capture Ltd, indicates an evolving approach towards the recognition of good
faith obligations in commercial contracts. This shift, while still cautious, signals a potential
convergence of legal principles in response to the demands of modern commerce and
international trade.
The controversy over the role of good faith in the United Nations Convention on Contracts for
the International Sale of Goods (CISG) and its absence in English contract law presents an
intriguing study in comparative law. Let's delve into these two perspectives.
Good Faith in the CISG. The CISG, an international treaty providing a uniform legal framework
for the international sale of goods, incorporates the concept of good faith. However, there's a
split in how this is interpreted. One view holds that good faith in the CISG serves as a guiding
principle for interpreting the convention itself. This perspective doesn't extend the application of
good faith to impose direct obligations on the parties in a contract. Attempts have been made to
define good faith. As an example, Powers suggests that: The duty of good faith can be defined as
an expectation and obligation to act honestly and fairly in the performance of one’s contractual
duties. A certain amount of reasonableness is expected from the contracting parties. Good faith,
in this sense, is more about understanding and applying the CISG's provisions rather than
dictating conduct in contractual relationships. The other view advocates for a more expansive
role of good faith under the CISG. Proponents of this perspective argue that good faith should
actively shape not just how the CISG is interpreted, but also how contracts are understood and
enforced. This implies that parties to a contract governed by the CISG have inherent obligations
to act in good faith, influencing both their rights and responsibilities. In general, both views are
most fully described by the statement of Bruno Zeller. “Good faith therefore has two distinct
functions or roles. First good faith is examined as a state of mind and secondly, it is looked at as a
principle found in various articles.”

Good Faith in English Law. Contrasting with the CISG, English law does not embrace a general
doctrine of good faith in contracts. This stance is somewhat unique among major legal systems.
In English contract law, there's no overarching principle requiring parties to act in good faith.
This means that, unlike jurisdictions that recognize such a doctrine, English law does not
typically impose a duty to conduct oneself in good faith throughout the duration of a contractual
relationship. Instead, English law may recognize elements of good faith in specific contexts or
types of contracts. However, this is far from a generalized principle and is usually more limited
in scope compared to the broader interpretations seen in other legal systems, including under the
CISG. Ewan McKendrick “Conclusions that would be reached in other legal systems by
invocation of the doctrine of good faith can be reached in other ways by the English courts.”

The CISG's acknowledgment of good faith reflects a more collaborative, trust-based approach to
international commerce, aiming for fairness and cooperation. In contrast, English law's
reluctance to adopt a general good faith doctrine mirrors its emphasis on contractual freedom and
certainty. The CISG's approach, particularly under the broader interpretation, allows for more
flexibility but potentially less predictability in contractual relations. English law, by favoring
certainty and the literal terms of the contract, may at times sacrifice the adaptability that a good
faith principle could provide. These differences also stem from varied legal traditions—CISG’s
roots in civil law principles that often include good faith vs. English law’s common law heritage
focusing on the letter of the contract. In summary, while the CISG entertains differing views on
the role of good faith, suggesting it could be a dynamic principle shaping contractual rights and
obligations, English law maintains a more restrained and specific application, reflecting its
unique legal culture and priorities.
The broader interpretation of good faith in the CISG, which extends beyond literal interpretation
to affect both the understanding of the CISG and the contractual obligations, stands in contrast to
the approach taken in English law. Let's explore how these two legal systems handle this concept
and compare them.
Broader Interpretation in the CISG. This view posits that good faith should influence not only
the interpretation of the CISG but also the conduct of the parties to a contract. It suggests that
good faith has a substantive role, in guiding behaviour and decision-making in contractual
relationships. Also, impacting on Specific Articles. For instance, the interpretation of Article
16(2)(b) of the CISG, which deals with the withdrawal of an offer, may be influenced by the
principle of good faith. This means that the actions of the parties concerning this article would be
assessed not just based on the literal wording but also considering the overarching principle of
good faith.
English Law's Approach to Good Faith. The interpretation and enforcement of contracts
typically rely on the explicit terms agreed upon by the parties. Where good faith is recognized in
English law, it's usually in specific types of contracts or under particular circumstances. For
example, in some relational contracts (like long-term collaboration agreements), courts have
sometimes recognized implied duties of good faith. However, this is not a general rule and is
applied on a case-by-case basis.
The CISG’s broader interpretation of good faith actively shapes the parties' behaviour and the
interpretation of the convention, whereas English law limits good faith to specific contexts,
emphasizing the sanctity of the contract's literal terms. The CISG’s approach allows for
adaptability and responsiveness to the nuances of international trade, potentially leading to more
equitable outcomes. English law, in contrast, prioritizes certainty and predictability, which are
foundational in its contract law principles. This contrast reflects deeper jurisprudential and
cultural differences. The CISG, with its international scope, adopts a more flexible and principle-
based approach, whereas English law, with its common law tradition, values the explicit terms of
a contract and the autonomy of the contracting parties. In essence, while the CISG embraces a
broader, more principle-driven approach to good faith, potentially affecting various aspects of
contractual relationships, English law remains more confined to literal interpretations and
specific applications, upholding the primacy of the written contract. This difference underscores
the divergent legal philosophies and cultural attitudes towards contract law in these two systems.
What would an organizing principle of good faith mean for English commercial law and the
parties to commercial transactions? Berger and Arntz in their last work say: “It is fair to assume
that acknowledging its existence will have an evolutionary rather than a revolutionary effect on
English contract law.” In this light, we need to stay in nova day changes.

Increasing acceptance of good faith in case law

The cases of Yam Seng PTE Ltd v International Trade Corporation Ltd and Bristol
GroundSchool Ltd v Intelligent Data Capture Ltd are pivotal in understanding the evolving
stance of English courts towards the concept of good faith in commercial contracts. These cases
highlight a gradual shift from the traditional English law approach, which historically did not
explicitly recognize a broad, overarching doctrine of good faith in contract law. Analyse the
significance of these cases we understand that the High Court recognized implied terms in the
contract, which required the parties to act honestly and not to provide false information.
Importantly, Leggatt J noted that practically every contract implies a duty of honesty and
adherence to accepted standards of commercial dealing. These standards are presumed to be so
fundamental that they don't need to be expressly stated in the contract. The judgment also
emphasized the concept of 'relational contracts', such as long-term distributorship agreements,
where there's an expectation of a high degree of communication, cooperation, and predictable
performance. In these types of contracts, additional good faith obligations, like the duty to share
relevant information, may be implied. Bristol GroundSchool Ltd v Intelligent Data Capture Ltd
case further endorsed the principles laid out in Yam Seng. It recognized that in certain 'relational
contracts', an implied term of good faith exists, mandating parties to act honestly. The court
found that Bristol's actions of secretly accessing and downloading data from Intelligent's
computer system constituted a breach of the implied duty of good faith.
Implications. These cases represent an increasing willingness by English courts to recognize and
enforce good faith obligations, at least in certain types of contracts. This is a significant
development in a legal system traditionally averse to a generalized principle of good faith. The
application of good faith is highly context-dependent, focusing on the nature of the contract and
the expectations of the parties. The concept is more readily applied in relational contracts that
inherently require a higher degree of trust and cooperation. These judgments balance the need for
flexibility and fairness with the traditional English law emphasis on certainty and the primacy of
the written contract. The courts are careful not to override explicit contractual terms but to imply
good faith obligations where they are deemed essential to the nature of the contractual
relationship.
The contrasting approaches of the CISG and English law towards good faith in contract law
reflect divergent legal traditions and cultural attitudes. However, the increasing recognition of
good faith obligations in English case law, especially in relational contracts, suggests a gradual
alignment with broader international legal principles. This evolution underscores the adaptive
nature of legal systems in response to the complexities of global commerce and the evolving
expectations of contractual fairness and cooperation. While the CISG represents a more
principle-driven approach, English law's recent cases indicate a move towards integrating
elements of good faith, balancing its traditional emphasis on contractual certainty with a growing
acknowledgment of the importance of ethical conduct in commercial dealings.