Good Faith in Common Law vs Civil Law Understanding the Key Differences
Good faith sounds simple until a dispute reaches court. One side says, “We followed the contract.” The other says, “You used the contract unfairly.” The gap between those two ideas is where good faith does its real work.
In law, good faith usually refers to honest, fair, and loyal conduct in a legal relationship. It does not mean being generous. It does not mean giving up commercial advantage. It means, at a minimum, not acting dishonestly, not abusing rights, and not frustrating the purpose of the agreement.
The difficult part is not the basic idea. The difficult part is how legal systems use it. Civil law systems tend to treat good faith as a broad organising principle. Common law systems are more cautious, often preferring specific rules and the exact wording of the contract.
This article is for general information only and is not legal advice.
What good faith means in legal terms
Good faith is often easier to understand by looking at what it tries to prevent.
A party may act in bad faith if they:
lie or mislead the other party
hide facts they have a duty to reveal
perform a contract in a way that defeats its purpose
use a technical right only to cause harm
refuse to cooperate where cooperation is needed
act inconsistently with a shared understanding
Good faith often includes two linked ideas.
Honesty means a party should not deceive, misrepresent, or knowingly take unfair advantage of false information.
Fair dealing means a party should not behave in a way that makes the bargain pointless, even if the contract does not spell out every detail.
For example, imagine a supplier agrees to deliver specialist parts “on request” during a long-term project. The buyer must give reasonable delivery information for the arrangement to work. If the buyer stays silent, then claims the supplier failed to perform, a court may ask whether the buyer acted in good faith.
Good faith does not remove commercial reality. Parties can still negotiate hard. They can protect their own interests. They can rely on clear contractual rights. The issue is whether they are using those rights in a way the legal system treats as honest, fair, and consistent with the relationship.
Why civil law gives good faith a central role
Civil law systems are usually built around codes. These codes set out broad principles as well as detailed rules. In many civil law countries, good faith appears directly in the civil code and applies across large parts of private law.
Countries such as France, Germany, Italy, Spain, the Netherlands, and many others recognise good faith in different ways. The wording and effects vary, but the shared idea is clear: contracts do not operate only as private documents. They sit inside a wider legal framework of fair conduct.
In civil law, good faith can shape several stages of a legal relationship.
Good faith before the contract is signed
Civil law systems often recognise duties during negotiations. A party may face liability if they negotiate in a misleading, abusive, or irresponsible way.
For example, a party might act wrongly if they:
enter talks with no real intention of contracting
break off advanced negotiations without proper reason after encouraging reliance
conceal information that the other party could not reasonably discover
use confidential information gained during negotiations for another purpose
This does not mean every failed negotiation leads to liability. Commercial talks can collapse for many valid reasons. The civil law point is that negotiation is not always treated as a legal free zone.
Good faith during performance
Once a contract exists, good faith can guide how parties perform it. A civil law court may expect each side to cooperate so the contract can achieve its purpose.
For instance, if a contract requires one party to approve technical drawings before work can continue, that party may need to review them within a reasonable time. They may not be allowed to delay approval simply to gain pressure over the other side.
Good faith when interpreting the contract
Civil law courts may use good faith to interpret unclear terms. They may look at the purpose of the agreement, the conduct of the parties, and what fair dealing requires in context.
This can make contractual rights more flexible. It may also make outcomes less predictable for parties used to literal drafting.
Why common law treats good faith more cautiously
Common law systems, including England and Wales, tend to start from a different premise. Courts place heavy weight on freedom of contract, certainty, and the words the parties chose.
The traditional common law view is that there is no general duty of good faith across all contracts. Instead, the law uses more specific doctrines to deal with unfair conduct.
These include:
misrepresentation
fraud
duress
undue influence
estoppel
fiduciary duties
implied terms
rules on contractual discretion
duties in special relationships, such as insurance or partnership
This approach reflects a concern that a broad duty of good faith could create uncertainty. If parties do not know what fairness requires until a judge decides, commercial planning becomes harder.
That said, common law is not hostile to good faith in every context. It often recognises similar ideas under narrower labels.
English law and relational contracts
English law has become more open to good faith in some long-term commercial relationships. Courts have discussed implied duties of good faith in “relational contracts”, where the parties expect ongoing cooperation rather than a one-off exchange.
Examples may include long-term distribution agreements, joint venture arrangements, franchise agreements, or infrastructure projects. These contracts often require trust, communication, and performance over time.
Even then, English courts remain careful. They do not usually impose a broad duty just because one party feels treated unfairly. They ask whether the contract, context, and relationship justify implying such a duty.
The United States takes a different common law path
The United States is also a common law jurisdiction, but many US systems recognise an implied covenant of good faith and fair dealing in contracts. This does not let courts rewrite the bargain. It usually prevents a party from using contractual discretion to deprive the other side of the benefit of the agreement.
This shows why broad comparisons need care. “Common law” does not mean one identical rule everywhere. England, Australia, Canada, and the United States each handle good faith in their own way.
The key differences between common law and civil law
The real divide is not that civil law cares about fairness while common law does not. Both systems punish dishonesty and abusive conduct. The difference lies in method, scope, and legal culture.
Issue | Civil law approach | Common law approach |
Source of duty | Often found in civil codes as a general principle | Usually found in specific doctrines, implied terms, or particular relationships |
Scope | Broad and potentially applies before, during, and after performance | Narrower and more context-specific |
Negotiations | May impose duties during pre-contractual talks | Usually limited unless there is misrepresentation, fraud, or another recognised wrong |
Contract wording | Good faith may shape the meaning and use of rights | Express terms are usually the starting point and carry strong weight |
Judicial role | Courts may openly apply broad standards of fairness | Courts often prefer precise rules and cautious implication |
Predictability | Flexible but sometimes less certain | More certain in drafting, but sometimes less flexible |
Remedies | May include damages or limits on the exercise of rights | Depends on the specific doctrine or duty breached |
A civil law lawyer may ask, “Was this conduct consistent with good faith?” A common law lawyer may ask, “Which specific legal rule has been breached?”
Both questions can reach similar results in some cases. They take different routes to get there.
How good faith affects real contract disputes
Good faith often matters most where the contract gives one party discretion.
Suppose a property developer has a right to approve design changes. If the contract says approval is “at the developer’s sole discretion”, can the developer refuse approval for reasons unrelated to the project? In civil law, good faith may limit that discretion. In common law, the answer may depend on the wording, context, and whether the court implies a limit on arbitrary or irrational decisions.
Another common example is termination. A party may have a strict right to end the contract after a missed deadline. If the delay is minor and caused by the terminating party’s own obstruction, a civil law court may treat termination as an abuse of right. A common law court may reach a similar result through waiver, estoppel, implied terms, or interpretation, but it will usually avoid saying that good faith overrides the express bargain.
Good faith can also arise in long-term supply contracts. If demand forecasts are needed for production, a buyer may need to provide them honestly and in time. If one party controls information that the other party needs to perform, silence or delay may become legally significant.
In each example, good faith acts as a check on opportunism. It asks whether a party is using the contract as a tool for performance or as a trap.
Why the difference matters in cross-border contracts
Good faith becomes especially important when parties from different legal traditions contract with each other.
A party familiar with English law may expect the written contract to do most of the work. If a duty is not written down, they may assume it does not exist unless the law clearly implies it.
A party from a civil law background may assume that cooperation, loyalty to the bargain, and fair dealing apply even when the contract is silent.
This difference can create serious surprises.
For example, a contract governed by German or French law may carry stronger expectations of pre-contractual and performance-related good faith than a party used to English law expects. A contract governed by English law may give less room for a broad fairness argument than a civil law party expects.
The governing law clause matters. So does dispute resolution. A court or tribunal will usually apply the chosen law, not the legal instincts of either party.
Good drafting can reduce the risk. Parties should state clearly:
whether they owe express duties of good faith
what cooperation requires in practice
how quickly approvals or responses must be given
what information must be shared
when termination rights can be used
whether discretion must be exercised reasonably
what happens if negotiations end before signing
If the parties want a good faith duty, they should define it. If they do not want one, they should still understand whether the governing law may impose one anyway.
Common misunderstandings about good faith
Good faith attracts confusion because it sounds moral as much as legal. Several misunderstandings come up often.
Good faith does not always mean reasonableness
Reasonableness and good faith overlap, but they are not identical. A party may act unreasonably without being dishonest. They may also act honestly but still breach a duty to cooperate.
In some systems, good faith includes objective fair dealing. In others, it focuses more on honesty or improper purpose.
Good faith does not cancel clear contract terms
Courts are usually reluctant to use good faith to destroy the bargain the parties made. Civil law may control abusive reliance on strict rights, but it does not treat every harsh result as unlawful.
Common law is even more cautious. If a term is clear, a court will usually enforce it unless another rule limits it.
Good faith is not the same in every country
Civil law systems differ from each other. Common law systems differ from each other. Even within one country, good faith may vary between consumer contracts, insurance, employment, commercial contracts, and fiduciary relationships.
A broad label can hide major differences.
A practical way to think about the divide
The simplest way to compare the systems is this:
Civil law often starts with a broad duty and then works out its limits.
Common law often starts with the contract and recognised rules, then asks whether a duty can be found.
That difference shapes legal advice, drafting, negotiation strategy, and litigation risk.
In a civil law contract, silence does not always mean freedom. The code and general principles may fill the gap.
In a common law contract, silence may matter more. If a party wants cooperation, reasonableness, disclosure, or limits on discretion, it is safer to write those duties into the contract.
Neither approach is automatically better. Civil law good faith can give courts useful tools to stop abuse. Common law caution can protect certainty and respect the bargain. The best system for a given dispute depends on the facts, the contract, and the legal culture behind it.
Good faith is not a vague appeal to kindness. It is a legal control on dishonest, abusive, or disloyal conduct within a legal relationship. In civil law, that control is often broad and openly stated. In common law, it is more likely to appear through specific rules, implied terms, and carefully defined duties.
For anyone dealing with cross-border contracts, the lesson is clear: do not assume good faith means the same thing everywhere. Define the behaviour expected, choose the governing law with care, and treat silence as a risk rather than a shortcut.
EMG training programmes can help legal teams, finance professionals and in-house counsel understand these differences in a practical way, with focused training on English law, UAE law, Saudi law, GCC contract drafting, arbitration, enforcement and finance documentation. The next step is to build legal knowledge before the negotiation starts, not after a dispute has already begun.
EMG Associates offers a comprehensive selection of professional development courses in London, Dubai and Riyadh (in collaboration with PLUS Specialty Training) . These programs are designed to enhance leadership skills and provide practical solutions for modern business challenges. Professionals can choose from various disciplines to advance their career goals in one of the world's leading economic hubs. If you are interested in law or legal English courses, then please visit :
Course in London : https://www.emguk.net/london-courses
Course in Dubai: https://www.emguk.net/international-courses
Comments