What are Good Faith Contracts?

The Court of Cassation affirms the importance of this principle

”  Good faith widely understood (loyalty, solidarity, proportionality and concern for contractual balance) is essential in all phases of the life of the contract: negotiation, information, conclusion, execution, interpretation, modification, renegotiation, non-performance, termination and its consequences ”  (Report of the Court of Cassation on the preliminary draft reform of the law of obligations known as the Catala project).

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Good faith, which is linked to the concept of trust, and in particular of legitimate expectations , is a general principle of Community law (cf. CFI, January 17, 2007, case T-231/04 Greece v / Commission.)

Is the primordial value of the duty of good faith in European contract law a purely formal originality? BENILLOUCHE Mikaël, Les Petites Affiches, n ° 151, July 29, 2004

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The 1980 United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention) enshrines good faith.

Artic 1-7 of the Unidroit Principles and Article 1: 201 of the Principles of European Contract Law  provide that “  parties are bound to comply with the requirements of good faith in international trade. They cannot limit this obligation or limit its scope  ”( Unidroit ) and that“  Each party is bound to act in accordance with the requirements of good faith. The parties cannot exclude or limit this duty  ”(Principles). The comments UNIDROIT under Article 1.7 point ” The ” good faith “as a fundamental idea underlying the Principles”

Principles of European contract law: good faith

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In contracts concluded after October 1, 2016, the obligation of good faith is not limited to the execution of contracts but also applies in the negotiation and formation of contracts.

( new article 1104 f the Civil Code )

“ Art. 1104.-Contracts must be negotiated, formed and executed in good faith.
“This provision is of public order .

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The Court of Cassation punishes the failure to respect this obligation of good faith: 1 ^st Civ, May 10, 1989 , Bull., N ° 187, p. 124).

good faith and negotiation

good faith and balance of the contract

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Good faith cannot be invoked outside of the contractual relationship. This is the case in post-contractual matters Cass. civ. 3rd December 14, 2005

it is good faith which is presumed and […] the fraud must be established by the one who alleges it Cass.soc. October 13, 2004

The general obligation in contract law   is embodied in the execution of contracts in article 1134 para. 3 of the Civil Code

(the agreements) “are carried out in good faith”

The Court of Cassation punishes non-compliance with this obligation: 1 ^st Civ, May 10, 1989 , Bull., N ° 187, p. 124).

But ” the Court of Cassation made a dynamic interpretation of the emblematic articles 1134 and 1135 of the civil code going well beyond the simple effects of the contract and their execution ” (Report of the Court of Cassation on the Catala project). The Court of Cassation quotes the Widow Picot judgment of November 5, 1913, which did not hesitate to give Article 2268 of the Civil Code according to which, in matters of acquisitive prescription, good faith is always presumed and that it is is for the one who alleges bad faith to prove it, a general scope applicable even to a marriage contract.

The principle of good faith extends to the formation of the contract. The obligation of good faith translates into a jurisprudential requirement of loyalty in negotiations and talks.

The obligation of good faith then translates into a requirement of balance and justice in the content of the contract. It is a question of the moral principle of reciprocity which is reflected, moreover, in the requirement of the cause.

From the obligation of good faith, case law derives a duty of  loyalty in the performance of the contract. The progress of the contract must be transparent.

The obligation of good faith weighs particularly on the professional. It reflects the necessary confidence of the non-professional in the professional.

“Bad faith” prohibits the use of limitation of liability clauses, in particular when the professional has not accomplished his mission.

Obligation to contract in good faith and duty of information

The obligation to contract in good faith imposes a duty of information v. Cass.civ. 1 March 15, 2005

Contradictory behavior and good faith

Behavior inconsistent with the request constitutes a breach of the obligation to perform the agreement  in good faith, Cass.com. March 8, 2005

Obligation of good faith and existence of contractual links

The obligation of good faith presupposes the existence of contractual links and that these cease when the condition precedent to which they were subject has failed Cass.civ. 3 September 14, 2005

Employment contract and good faith

The employment contract must be performed in good faith. The employer’s good faith is presumed according to the general principle of the presumption of good faith

The Court of Cassation founded an employer’s duty to ensure the adaptation of employees to the development of their jobs on the basis of the employer’s obligation, bound to perform the employment contract in good faith. Cass.soc. February 25, 1992

Contractual imbalance in a concession contract and obligation of loyalty and good faith performance

Within the framework of a concession contract , in the event of an economic imbalance existing from the conclusion of the contract, the Court of Cassation considered that the obligation of loyalty and execution in good faith of the contracts prohibited the grantor from justifying its withdrawal. brutal and unilateral on the structural imbalance of the contract which, by its negligence or its imprudence, it had not been able to appreciate, Cass. civ. 1, 16 March 2004

Bond and good faith

breaches its obligation to contract in good faith and thus commits fraud through reluctance the bank which, knowing that the situation of its debtor is irremediably compromised or at the very least heavily compromised, fails to bring this information to the attention of the surety in order to to encourage the latter to commit Cass.civ. 1 May 10, 1989