Good Faith and English Contract Law Essay Example | Topics and Well Written Essays - 3500 words

Good Faith and English Contract Law - Essay Example Good faith is vital concept in law and it is a prime essence in contractual dealings. Persons are expected to act in good faith for fair dealings in day-to-day business contracts. The concept of good faith has a large bearing on contract law as well as law of obligations. In contract law good faith is indispensable element. Though the contract is formed with free consent or free will good faith is inseparable from contract1. 1. An institutional competent dimension: When good faith is viewed from this dimension in England the institutions of the law, which are the courts, interpret good faith according to needs for rendering justice. Thereby giving room for arbitrary decisions. If the doctrine of good faith introduced in law of contract there would be judicial restraint, judges loose the liberty of interpreting the concept. Their discretionary powers are restricted. Simultaneously equitable flexibility is also affected. 2. Formal dimension: When we view the good faith in formal dimension it appears as vague. When it is vague it is difficult to define the good faith to introduce into contract law. The term good faith has vague meaning, lot of efforts are to made to define the good faith to make it as a statute. ... Presently the Judges use this term in various occasions in rendering the justice using their profound experience and after legitimate study of the case. The vagueness of the term is cured with their professional knowledge and profound experience before the benefit of good faith is extended to the deserved. 3. Substantive dimension: Substantive dimension refers to the contractual ethics. Contractual ethics imposes duty of good faith on the contracting parties. When such ethics are broken what is remedy Like any ethics contracting ethics are moral of the individuals, which they are supposed to keep up. The contract law does not interfere on morals. When good faith, which is vital element in business contracts is left to the ethics, which is not protected under the contract law the interest of the parties is at risk. This risk can be avoided by introducing the doctrine of good faith into contract law. Historically good faith functioned as a binding element between people by formless contracts (pacta nuda) even if there was no written contracts, to confer priority to the intention of parties and contractual terms than their literal meaning. Such contracts inclined to substantive fairness qua the intended meaning of the contract. Contract is defined in English contract law: Since the good faith is a vital element in all contracts it is essential to have a brief view of what how contract is confined under the definition in English law. As per this definition, the essential ingredients of contract are a) consensus ad idem, b) consideration, c) legal object, d) capacity to contract. Apart from these, another ingredient i.e. intention of the parties is also important