Thursday 18 December 2008

The Sensibility of Good Faith and Fair Dealing Doctrine

Introduction

Many civil law systems around the world, and perhaps major common law systems such as the United States recognizes and enforces the general principle of good faith in making and carrying out contracts.[1] For example, Section 242 of the German BGB (Civil Code) provides that contracts must be performed in the manner required by good faith and fair dealing, taking into consideration the general practice in commerce; Article 1134 of the French Civil Code likewise provides that contracts must be performed in good faith; and the Italian Civil Code refers to good faith and fair dealing in negotiation (Article 1337), interpretation (Article 1366), and performance (Article 1375).[2] In the common law system such as in the United States, the doctrine of good faith performance has three textual underpinnings: the Uniform Commercial Code, the American Law Institute’s Restatement (2d) of Contracts, and the United Nations Convention of Contracts for the International Sale of Goods.[3] However, despite of those legal systems which adopt good faith, most English lawyers find it difficult to adopt a general concept of good faith.[4]

The UNIDROIT, which its objective is to prepare modern and where appropriate harmonized uniform rules of private law understood in a broad sense,[5] also applies the good faith and fair dealing principle in the Principles of International Commercial Contracts (“the Principles”). The Principles address good faith as a principle directed to the parties of international contracts: "Each party must act in accordance with good faith and fair dealing in international trade" (Article 1.7 (1) Principles). Even more specifically, Article 4.8 (2) (c) of the Principles refers to good faith and fair dealing as a determining element when and which omitted contract term has to be implied. Besides Article 1.7 and 4.8, there are also a number of more specific applications of the principle of good faith and fair dealing. For examples Articles 2.1.4(2)(b), 2.1.15, 2.1.16, 2.1.18, 2.1.20, 3.5, 3.8, 3.10, 4.1(2), 4.2(2), 4.6, 4.8, 5.1.2, 5.1.3, 6.1.3, 6.1.5, 6.1.16(2), 6.1.17(1), 6.2.3(3)(4), 7.1.2, 7.1.6, 7.1.7, 7.2.2(b), (c), 7.4.8 and 7.4.13.[6] These imply that good faith and fair dealing may be considered as one of the fundamental ideas underlying the Principles.

The concept of good faith depends on the standard of morality and fairness and these standards differ based on the people, the context and the circumstances involved. These standards may lead to many problems such as uncertainty and inconsistency in the performance and interpretation of contract. As the Principles’ objective is to provide guidance and general rules in drafting international commercial contracts and settling disputes in the context of international trade, this paper attempts to describe the standards of good faith in the Principles through their approach in addressing the legal concept of good faith. The goal of this paper is to assess how realistic is the Principles in accommodating the legal concept of good faith and fair dealing, and also to analyze the problems and the difficulties in applying the concept of good faith and fair dealing to the international commercial contracts. To support the argument, examples of several court and arbitral decisions which rely on good faith provisions in the Principles will also be given in this paper.

Good Faith in commercial contract

Even though good faith and fair dealing principle has been used in many legal systems in the world, there is no precise definition of this principle. P J Powers,[7] without aiming to formulate any specific domestic interpretation of this principle, has tried to restate that the duty of good faith can be considered as a duty of the parties to act ‘reasonably’ as they would expect the other party to act. In a commercial contract, it means that this principle is the basic principle to treat the other party with regard to the standard of morality and fairness. However, by nature it is nearly impossible to define the standard of morality and fairness because these standards are varies depending on one’s perspective.

The dilemma of defining morality and fairness and the infinite perspectives on fairness, and by extension, good faith, may lead to uncertainty. Grubb stated that “Whilst everyone agrees that a doctrine of good faith represents some set of restrictions on the pursuit of self- interest, the objection is that it is not clear how far these restrictions go...[8] In other words, good faith presupposes a set of moral standards against which the parties are to be judged, but it is not clear whose (or which) morality this is or how far these restrictions go. An endless uncertainty about a number of critical questions occurs where there is no clear moral reference point. Several examples are, to name a few, whether the good faith should be seen subjectively or objectively. Subjective good faith requires only a clear conscience whereas objective good faith introduces a standard of fair dealing independent of personal conscience. Furthermore, it is also related to the phases of contracting, whether good faith should be used in all phases of contracting. Other critical questions are regarding bad faith, would a requirement of good faith add anything to the regulation of bad faith? Would good faith entail both negative and positive requirements? and so on.[9]

Furthermore, viewing from several English lawyers’ arguments, good faith doctrine has negative impacts to commercial contract.[10] Noting from Michael Bridge’s argument, “…it would be wholly inappropriate to introduce a doctrine of good faith into the commodities markets, where dealing is intrinsically competitive and where opportunistic behavior is to be expected.[11] This is not to say that, even in the commodities markets, good faith is totally rejected. However, to such an extent, good faith concept is accepted, which is taken up in the standard terms of the trade and this is the way that the market best deals with new questions of fair dealing.

Good Faith and Fair Dealing Provisions in the Principles

The Principles are also silent in defining good faith, and this indefinite terminology makes it seems unrealistic to impose this concept through the Principles. However, there are several terms used to express the notion of good faith range from “good faith and fair dealing,”[12] “bad faith,”[13] “reasonable commercial standards of fair dealing,”[14] “grossly unfair”[15]. Even though the Principles use different terms, in general the legal concept of good faith is woven in the major provisions of the Principles. Those different terms of good faith provisions in the Principles standardize the applications of international commercial contracts, which are ranged from the aspects of pre-contractual obligations in the negotiation process, formation and modification of contract, material validity, interpretation of contracts, implied obligations, and non-performance caused by creditor.[16]

The basic provision of good faith and fair dealing in the Principles is stipulated in the Article 1.7, and it is clearly stated that: (1) Each party must act in accordance with good faith and fair dealing in international trade; and (2) The parties may not exclude or limit this duty. As the basic provisions, it should be noted that the other provisions of the Principles and/or the comments thereto at times refer only to "good faith" or to "good faith and fair dealing", should always be understood as a reference to "good faith and fair dealing in international trade" as specified in this article.[17]

Viewing from the paragraph (1) of Article 1.7, it is clear that the Principles acknowledge that good faith plays an important rule for international contracts and the context of good faith and fair dealing are not to be applied according to the standards ordinarily adopted within the different national legal systems. In other words, good faith and fair dealing must be construed in the light of the special conditions of international trade, but domestic standards may be taken into account if only that they are shown to be generally accepted among the various legal systems.[18] Furthermore, in the paragraph (2), the parties' duty to act in accordance with good faith and fair dealing may not be contractually excluded or limited. Therefore, parties to contract cannot, with any reasonable certainty, predict what kind of performance is prohibited by Article 1.7, yet they cannot exclude from the scope of their obligations. The specific applications of the general prohibition to exclude or limit the principle of good faith and fair dealing between the parties may be seen in Articles 3.19, 7.1.6 and 7.4.13 of the Principles.[19]

Other than the basic provision of good faith stipulated in the Article 1.7, as previously discussed, there are also specific provisions in the Principles to standardize the expectation of how good faith and fair dealing doctrine should be applied in international commercial contracts:[20]

a. Pre-contractual Obligations in the Negotiation Process

Article 2.1.4 (2) (b) stipulates that an offer cannot be revoked if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer. This article gives a binding effect of some particular conduct and reliance on it emanates from the good faith principle that no one should take advantage of acts or situations which are irreconcilable with his prior conduct.

Other provisions in pre-contractual obligations in the negotiation process is Article 2.1.15, especially subsections (2) and (3) which provide that when a party who negotiates or breaks off negotiations in bad faith, then he is liable for the losses caused to the other party, and that it is bad faith, in particular, for a party to enter into or continue negotiations when intending not to reach an agreement with the other party. This article specifies that the good faith principle demands fair negotiations with a clear view to reach agreement. Misuse of the negotiation process to the detriment of the other party offends the standard of good faith recited in the Principles. Therefore this article assists in giving some notice to the parties of what standards on conduct are excluded from the notion of good faith.[21]

b. Formation and Modification of Contract

The Principles, through Article 1.8 regarding “inconsistent behavior”, do not allow a party to act inconsistently which may cause the other party to have and upon which that other party reasonably has acted in reliance to its detriment. Moreover, in relation to modification in a particular form, Article 2.1.18 states that a contract in writing which contains a clause requiring any modification or termination by agreement to be in a particular form may not be otherwise modified or terminated. In other word, only if a written contract contains a no oral modification clause then any modification must also be in writing or in the form the parties agreed upon. But to this exception, the Principles allow an identical sub-exception grounded on the good faith principle: "…a party may be precluded by its conduct from asserting such a clause to the extent that the other party has acted in reliance on that conduct." Again conduct which creates a situation of reliance and acting on it override rules of strict formality.

c. Material Validity

Article 3.5 regarding “relevant mistake” stipulates that there are several conditions which might allow a party to avoid a contract when it was already concluded. Those conditions that must be fulfilled in order to allow a party to avoid a contract are:

1. A reasonable person in the same situation as the party in error would only have concluded the contract on materially different terms or would not have concluded it at all if the true state of affairs had been known; and

2. The other party made the same mistake, or caused the mistake, or knew or ought to have known of the mistake and it was contrary to reasonable commercial standards of fair dealing to leave the mistaken party in error; or the other party had not at the time of avoidance reasonably acted in reliance on the contract.

However, a party may not avoid the contract if it was grossly negligent in committing the mistake; or the mistake relates to a matter in regard to which the risk of mistake was assumed or, having regard to the circumstances, should be borne by the mistaken party.

Furthermore, Article 3.8 regarding “fraudulent” also allows a party to avoid a contract when it has been led to conclude the contract by the other party’s fraudulent representation, including language or practices, or fraudulent non-disclosure of circumstances which, according to reasonable commercial standards of fair dealing, should have been disclosed. In relation to Articles 3.5 and 3.8, noting from Farnsworth’s statement,[22] the standard of good faith when it is coupled with the concept of fair dealing and reasonable commercial standards would tend to be an objective standard.

d. Interpretation of Contracts

In addition to addressing conduct and performance in terms of good faith, the Principles also address good faith in terms of contract interpretation, or as a canon of contract construction.[23] The article which relates to this aspect is Article 4.8 regarding “Supplying an omitted term”. It states that where the parties to a contract have not agreed with respect to a term which is important for a determination of their rights and duties, a term which is appropriate in the circumstances shall be supplied, furthermore in determining what is an appropriate term regard shall be had, among other factors, to (a) the intention of the parties; (b) the nature and purpose of the contract; (c) good faith and fair dealing; (d) reasonableness. Therefore, it can be seen that when a contract term has been omitted from the contract, that term may be supplied by reference to “good faith and fair dealing,” among other factor. However, this provision does not assist in determining the precise standard of good faith and fair dealing principle.

e. Implied Obligations

Article 5.1.2 stipulates that implied obligations stem from (a) the nature and purpose of the contract; (b) practices established between the parties and usages; (c) good faith and fair dealing; and (d) reasonableness. Furthermore Article 5.1.3 which deals with co-operation between the parties states that each party shall cooperate with the other party when such co-operation may reasonably be expected for the performance of that party’s obligations. The rule can be understood as expression of the general principle, based on good faith, that neither party must hinder performance through the other nor otherwise militate against the contractual purpose.[24]

f. Non-performance Caused by Creditor

According to Article 7.1.2, a party may not rely on the non-performance of the other party to the extent that such non-performance was caused by the first party’s act or omission or by another event as to which the first party bears the risk. This provision again can be traced back to the sub-principle of good faith that no one should profit from own unlawful or otherwise forbidden acts.[25]

By those aspects stated above, the Principles have set the standards of good faith which they expect to be applied to international commercial contracts, and by the standards, it is more sensible to apply the good faith doctrine under the Principles into international commercial contracts. As a non-binding law, the Principles shall be applied when the parties have agreed that their contract be governed by the Principles and may be applied when the parties have not chosen any law to govern their contract.[26] They are merely an effort to restate contract law principles in the context of international trade and, as discussed in this paper, to provide guidance in legislating, drafting contracts and settling disputes, particularly before arbitral tribunals. [27]

Basically there are number of reasons why parties may wish to choose the Principles as the law governing their contract.[28] First, neither party is strong enough to impose its own domestic law. Second, parties cannot agree on the choice of the domestic law of a third country. Third, the Principles provide a comprehensive set of rules governing the most important areas of contract law. Fourth, the Principles, written in a clear and non-technical terminology, are easier to understand than most domestic laws. And the last, the Principles, prepared with the participation of experts from the same countries/regions of the parties, let parties feel immediately comfortable with them.

The Principles as references in dispute resolutions

As a general rules for international commercial contracts, the Principles also play a major role in international dispute resolution. Based on UNILEX database,[29] it presently reports 149 decisions referring in one way or another to the Principles, which consist of 112 arbitral awards, and 37 court decisions, and these numbers actually much higher since arbitral awards usually remain unpublished. In relation to the Principles as the reference in international dispute resolution, usually courts and arbitral tribunal apply the Principles as the law governing the contract; or refer to the Principles as a means of interpreting and supplementing domestic law; or refer to the Principles as a means of interpreting and supplementing international uniform law

As facts that good faith provisions in the Principles are in line with many jurisdictions and also sensible enough to be applied in international commercial contracts, examples of court and arbitral decision which rely on or refer to good faith provisions in the Principles are given below:

1. Award of the Arbitration Court of the Lausanne Chamber of Commerce and Industry of 17 May 2002[30]

In the contract between a Turkish company and a company incorporated in the West Indies concerning highly sophisticated equipment, the parties agreed to apply the Principles to govern a dispute in which their services contract referred to "general principles of law applicable to international commercial contracts". The contract contained two conflicting choice of law clauses: one in favour of English law, the other in favour of Swiss law; the arbitral tribunal suggested to the parties to agree on the application of the Principles; the parties agreed also in view of the fact that with respect to the disputed issues the solutions provided by the Principles were found basically to correspond to both English and Swiss law; the arbitral tribunal applied Articles 1.7 on good faith, 2.1.16 on the duty of confidentiality, 4.6 on the contra proferentem rule, and 7.4.1, 7.4.2 and 7.4.4 on damages.

2. ICC Award of 4 September 1996 No. 8540[31]

In a pre-bid agreement between a U.S. supplier of telecommunications systems and a Middle Eastern manufacturer of telecommunications cables, the parties undertook to negotiate in good faith for the supply of cables in the event that the U.S. supplier’s bid to become prime contractor for a telecommunications expansion project succeeded. The U.S. supplier secured the entire contract, but after a series of fruitless negotiations terminated the preliminary agreement on the ground that the parties were unable to conclude the contemplated final agreements, the Middle Eastern manufacturer objected that the U.S. supplier had failed to negotiate in good faith and claimed damages for the breach of the pre-bid agreement. The arbitral tribunal applied the law of the State of New York, but having found that under the law of the State of New York it was controversial whether an agreement to negotiate in good faith was enforceable, Articles 1.1, 1.3, 1.7 and 2.1.15 of the Principles were referred to by the tribunal only as further support for its decision that an agreement to negotiate in good faith is binding under the law of the State of New York.[32]

3. Federal Court of Australia, 30 June 1997, No. 558 (Hughes Aircraft Systems International v Air services Australia)[33]

The dispute concerned a bidding procedure, which had arisen between a Californian company and an Australian governmental agency after the latter awarded the contract to another bidder. According to the claimant, the defendant had failed to conduct the tender evaluation fairly and in a manner that would have ensured equal opportunity to both bidders. In this case, Article 1.7 of the Principles was referred by the Federal Court of Australia as a reference to supplement the domestic law. It concluded that in the affirmative, in support of its ruling, that a general duty of good faith and fair dealing was not only recognised in a number of foreign jurisdictions but had also been propounded as a fundamental principle to be honoured in international commercial contracts.

All the examples provided above are just some of court and arbitral decisions which referred to the good faith provisions in the Principles, especially Article 1.7. However, in practice, the applications of the good faith and fair dealing concept in the Principles are not always immaculate. There are several examples noted from some arbitral decisions regarding issues and/or difficulties encountered in applying the concept provided in the Principles:

1. Failure to perform a contract in good faith will not necessarily lead to legal remedy. [34]

In Anderson Consulting Business Unit Member vs. Arthur Anderson Business Unit Member Firms et al. an arbitral tribunal referred the Principles to supplement the legal rule applicable to the contract, in which the parties also had stated that the Principles should be the law governing the contract.[35] The contractual agreements among the parties forbid the Anderson Worldwide Organization (AWO) member firms to engage in uncooperative acts to benefit themselves at the expense of other member forms. Such acts are contrary to the member firms' implicit obligation to cooperate and to pursue their professional practice in accordance with the principle of good faith and fair dealing inherent to international contracts. In this case, without reference to any specific provision of the Principles, the tribunal’s view based on such conduct, that the breach of good faith was insufficient to provide a contract remedy to the affected party. In terms of performance, the decision indicates that good faith has no meaning at all, and a failure to perform a contract in good faith will not necessarily lead to legal remedy.

2. Good faith includes an obligation to attempt to resolve disputes, but not to reach settlement.[36]

In an ad hoc arbitration in 2004 which referred to French Law and Article 1.7 of the Principles,[37] (when the dispute arose) the parties were bound to act in good faith in search of an amicable solution. The mere fact that the parties did not agree on a compromise settlement does not in itself reveal lack on good faith on Claimant’s side and the tribunal concluded that the mere failure to reach an agreement was not in itself a breach of good faith and that parties are not required to “grant large concessions” in order to comply with the good faith obligation. From this case, the nature of good faith seems so ambiguous. In one hand the parties have an obligation to attempt to resolve disputes in an amicable solution, but on the other hand they do not have to grant large concessions to reach an agreement.[38]

3. A contract cannot be avoided for failure to disclose information unless the non-disclosure was made with fraudulent intent.[39]

Referring to Article 3.5 regarding “Relevant Mistake” and Article 3.8 regarding “Fraud” of the Principles, a party in the ICC Award No. 9474 claimed that a contract should be nullified due to an alleged fraudulent non-disclosure of a payment of a consulting fee by the opposing party.[40] The party claimed, under the Article 3.8, that the non-disclosure was a circumstance which, “according to reasonable commercial standards of fair dealing,” the latter party should have disclosed. In accordance to this claim, the tribunal concluded that there was no fraudulent non-disclosure because there was no sufficient evidence that the payment was made in fraudulent intent.[41]

From this case, as discussed in this paper, the standard of good faith, especially in terms of “fair dealing and reasonable commercial standards”, would tend to indicate objective standards which is unaffected by a party’s intent.[42] However, the tribunal in this case based its conclusion on the party’s intent which is contrary to the generally accepted standard for fair dealing.

From those examples of arbitral decisions above, even though the Principles have tried to specify what good faith and fair dealing is designated to mean in their provisions, it is true that there are also difficulties in applying the provisions of the Principles in international commercial contract. In some cases, good faith may not be reliable enough to provide legal remedy, or sometimes it gives uncertainty because of the vast interpretation of the concept. Moreover, does the addition of the word commercial confine the standard to what is done by others in commerce, to the exclusion of a course of dealing observed by the parties but not by others? In view of the pervasiveness of the concepts of good faith and fair dealing, it was perhaps inevitable that some inconsistencies would appear in the language concerning them.[43] In accordance to this, Farnsworth stated that one must hope that those who have occasion to apply the Principles will find the means by which to reach rational solutions in the face of what seem to be irrational variations.

The Vast Interpretation of Good Faith Provisions

Notwithstanding to the inconsistencies which would appear in the language concerning the terms of good faith, there are few good reasons why the Principles provide the good faith provisions in vast interpretation as they are provided. Firstly, good faith provisions provide umbrella principle. In the absence of a doctrine of good faith, the law of contract is ill-equipped to achieve fair results, on occasion leaving judges ‘unable to do justice at all’.[44] As an umbrella principle, the provisions may cover, unify, and fill the gaps between a range of specific doctrines designed to secure fair dealing. Furthermore, the umbrella principles can be used by judges in hard cases for several purposes. For example, it can be used as a justification for one-off decision; or to adumbrate some new principle of fairness; or to expand the extent of an already recognized principle. The extension can expands the range of equitable estoppels into pre-contractual dealings; or expands the principle of duress to some forms of economic pressure, and so on.[45]

Secondly, good faith provisions provide security and flexibility. The provisions may provide contracting parties greater protection which leads to greater flexibility about the ways in which they are organized to do business, or to be interpreted. In addition to the reasons, there are also several arbitral decisions which getting advantages from the vast interpretation of the provisions:

1. Good faith provisions provide “reciprocal trust between the parties” in doing business. Using ICC Award No. 8908 as an example, the arbitral decision indicates that good faith will be attributed to the parties’ behavior during contract formation insofar as that behavior informs the interpretation of the contract.[46] Based on the Principles and other legal rules, the tribunal held that the conduct of the parties could be used to interpret the meaning of the agreement. This decision not only implies that a tribunal will attribute fairness to the terms of an agreement, but will also attribute fairness to the parties behavior (such as acceptance of a counterproposal) in order to give meaning to the terms of an agreement.[47]

2. Good faith prevents a party from doing indirectly what a contract prohibits directly. In ICC Award No. 9875, the Principles were applied at the request of the parties. The tribunal stated that it would specifically take into account the principle of good faith. In rendering the award, the tribunal held that good faith prevents an interpretation of a contract that would allow a party to “do indirectly” (through a contract with a third party) what the contract prevents a party from doing directly. Good faith prevents a party from selling to an entity which one knows or should reasonably know intends to resell in another licensee’s territory”. Thus, the initial contract was held to have been breached by the execution of the third party contract allowing the third party to do what the party itself could not. Good faith will therefore prevent an indirect breach of a contract.

Conclusion

Good faith and fair dealing doctrine is one of the fundamental ideas underlying the Principles. There are different terms used to express the notion of good faith in the Principles. An endless uncertainty about a number of critical questions occurs where there is no clear moral reference point. Moreover, one might say, the introduction of a doctrine of good faith into commodities market would be inappropriate, where dealing is fundamentally competitive and where opportunistic behavior is to be anticipated.

The Principles have set the standard of good faith and fair dealing through their provisions, and this doctrine applies to all phases of contracting. When the Principles apply as the law governing a contract, the contract must be construed based on the Principles’ provisions in the light of the special conditions of international trade, even though sometimes domestic standards may be taken into account if only that they are shown to be generally accepted among the various legal systems. These provisions are proven as reliable source to be provided as the law governing the contract when the parties have so agreed or if the arbitral tribunal deems them applicable. Since the Principles are designed to be persuasive on issues of contract law, several arbitral tribunals have generally utilized good faith under the Principles merely as a reference or a guide, and in some cases, a confirmation of the adequacy of the application of a principle of domestic law.

As an international legislative product, the Principles are not immaculate. They are just a mere guidance which restates contract law principles in the context of international trade. It is also inevitable that some inconsistencies would appear in the language concerning them. In practice, to understand good faith not only requires a clear conscience (subjective good faith) but also requires personal conscience (objective good faith), for example when it is coupled with the concept of fair dealing and reasonable commercial standards. However, in the end it is courts’ or arbitral tribunals’ role to make decisions to reach rational solution in interpreting the provisions in the Principles under the ambiguous nature of good faith. This nature of good faith provisions merely provides umbrella principle to give space for judges to apply justice, fairness, and not to forget, objective standard.

In the perspective of commodities market and international trade, the Principles through the good faith and fair dealing doctrine provide “reciprocal trust” between the parties, with the expectation that the contract should be performed in honesty and in regard to reasonable commercial standards of fair dealing. In the end, the application of this doctrine will provide balance in the international trade and commodities market while dealing is intrinsically competitive and opportunistic.


[1] Brownsword, Roger. Contract Law: Themes for the Twenty-First Century. Butterworths; London, Edinburgh, Dublin (2000) p. 98.

[2] Ibid. p. 97 Also see Lando and Beale (eds). The Principles of European Contract Law: Part I. (1995).

[3] Beatson and Freeman. Good Faith and Fault in Contract Law. Clarendon Express; Oxford (1995) p. 155.

[4] Ibid. Brownsword, p. 98. See also Beatson and Freeman, p. 157.

[6] Magnus, Ulrich. Guide to Article 7 CISG: Comparison with UNIDROIT Principles of International Commercial Contracts. Pace Law School Institute of International Commercial Law (2007)

[7] P J Powers. Defining the Undefinable: Good Faith and the United Nations Convention on Contracts for the International Sales of Goods. (1999) 18 Journal of Law and Commerce 349 cites Garvin.

[8] Andrew Grubb & Michael Furmston, The Law of Contract, at 73 (London: Lexis Nexis UK, 2d ed.

2003).

[9] Ibid. Brownsword, p.101.

[10] Ibid.

[11] Bridge, Michael. Good Faith in Commercial Contracts in Brownsword, Hird and Howells (eds). See also Brownsword, Roger p. 105.

[12] UNIDROIT Principles Arts. 1.7, 4.8 & Art. 5.2.

[13] UNIDROIT Principles Art. 2.15.

[14] UNIDROIT Principles Arts. 3.5, 3.8 & Art. 3.10.

[15] UNIDROIT Principles Art. 7.1.6.

[16] Ibid. Ulrich.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Ibid.

[22] Farnsworth, E. Allen. Duties of Good Faith and Fair Dealing Under the UNIDROIT Principles, Relevant International Conventions and National Laws. 3 Tul. J. Int’l & Comp. L 47, 60 (1995). However, circumstances unique to the particular parties involved should not be ignored.

[23] Ibid. Farnsworth.

[24] Ibid. Ulrich.

[25] Ibid.

[27] Bonell, Michael Joachim. The UNIDROIT Principles of International Commercial Contracts: Why?

What? How?, 69 Tul. L. Rev. 1121, 1122 (1995)

[28] Ibid.

[29] www.unilex.info (last visited on 30 March 2008)

[30] Sharpe, Charles N. Brower & Jeremy K. The Creeping Codification of Transnational Commercial Law: An Arbitrator's Perspective. Virginia Journal of International Law (Fall 2004) 199-221

[31] www.unilex.info/case.cfm?pid=2&do=case&id=644&step=FullText (last visited on 1 April 2008) ICC International Court of Arbitration, Award No. 8540, Paris, (04.09.1996).

[32] www.ccs.cl/html/eventos/2007/doc/Santiago%20PICC%2013%20June%202007%20II.ppt (last visited on 3 April 2008) Presentation by Herbert Kronke, Secretary General UNIDROIT in Santiago 13 June 2007, UNIDROIT Principles: Role in International Dispute Resolution.

[33] Ibid. Bonell.

[34] Barnes, Naomi Julia. Good Faith under the UNIDROIT Principles of International Commercial Contracts: A Struggle for Meaning. Available at http://www.dundee.ac.uk/cepmlp/car/html/ CAR9_ARTICLE14 .pdf (last visited on 30 March 2008).

[35] www.unilex.info/case.cfm?pid=2&do=case&id=668&step=FullText (last visited on 30 March 2008) Anderson Consulting Bus. Unit Member Firms v. Arthur Anderson Bus. Unit Member Firms, et al., ICC International Court of Arbitration, Case No. 9797, Geneva (28.07.2000).

[36] Ibid. Barnes.

[37] http://www.unilex.info/case.cfm?pid=2&do=case&id=973&step=FullText (last visited on 30 March

2008) unknown, Ad hoc Arbitration, (04.03.2004).

[38] Ibid. Barnes.

[39] Ibid.

[40] http://www.unilex.info/case.cfm?pid=2&do=case&id=690&step=FullText (last visited on 30 March

2008) Unknown, ICC International Court of Arbitration Award No. 9474, Paris (00.02.1999).

[41] Ibid.

[42] Ibid. Farnsworth.

[43] Ibid.

[44] Powell, Raphael. Good Faith in Contracts. (1956) 9 CLP 16, 26.

[45] Ibid. Brownsword, p.109.

[46] www.unilex.info/case.cfm?pid=2&do=case&id=663&step=FullText (last visited on 30 March 2008) ICC International Court of Arbitration , Award No. 8908, Milano (00.09.1998).

[47] Ibid.

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