Abstract
This Chapter examines the evolving principle of good faith. The informing legal principle has shaped the law of contracts for centuries and it has been introduced for the first time under Roman law. Therefore, this Chapter illustrates the origins and evolution of the Roman concept of bona fides until the modern evolution of the same principle under the CISG and UPICC at International level as well as the PECL, CFR and CESL at European level. In this light, a new dimension of bona fides is discovered in its private dimension. The aim of this Chapter is to highlight the different perspective of the study of bona fides from public law to private law. Indeed, a privatisation of good faith can be seen as a natural development, but at the same time its construction as a general clause has privatised its meaning contributing to a possible denaturalisation of the entire concept.
The author is thankful to the invaluable support of the Max Planck Institute in Hamburg
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Notes
- 1.
Zimmermann and Whittaker (2000). The authors highlight that one of the most important comparative law textbooks, that by Zweigert and Koetz “An Introduction to Comparative Law” lacks a chapter on the principle of good faith. This is because it is extremely difficult to carry out a comparative study of a legal principle that does not have any mandatory definition and can be even vague in some cases.
- 2.
Directive 2002/65/EC concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directive 97/7/EC and 98/27/EC (2002) OJ L. 271/16.
- 3.
Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law [2011] COM (2011) 635 final 2011/0284.
- 4.
The expression Roman legal history can directly give rise to the concern to firstly define the concept of Roman law. Notwithstanding, the term ‘Roman law’ can be misleading because as it has been noted by Orestano (1961, p. 511) there are at least six different connotations of Roman law such as Roman law as Roman legal history; Roman law as Roman tradition; Roman law as European ius commune; Roman law as the study of pandects; Roman law as ‘romanistica’ that means the study of the history of Rome; and finally Roman law as ‘romanesimo’ that means the identification of ideals and political tendencies that were born in Rome and that have further inspired the ideology of other generations. However, within these several meanings, Orestano constructs the Corpus Iuris Civile as the highest summary and explanation of Roman law intended as Roman legal history, and on the other hand it can be conceptualised as the starting point of all the other different meanings. In this section I would like to introduce the reader to the first meaning of Roman law, namely Roman law in the sense of Roman legal history.
- 5.
Biondi (1972) and Johnston (1999). In particular, the classification of Roman legal history, although conventional can vary in accordance to the different perspectives that are taken into account such as the evolving conception of ownership, the contractual obligations, the development of public law etc. For this reason, a more coherent structure based on the development of law functioning has been proposed.
- 6.
Orestano (1961), p. 511.
- 7.
Mousourakis (2003), p. 22.
- 8.
The Romans had with the Latini a special relationship because they had with Romans the so called ius commercii, and with the Latini prisci also the ius connubii, namely the possibility of having a marriage with Roman citizens; essentially it could be said that the Latini were a federation of Italian populations that tried to merge in order to oppose the new hegemonic power of Rome. Nonetheless, after the battle of lake Regillus (499 B.C.) the consul Spurius Cassius entered into a new foedus, namely a new federation that had to be composed of the Latini and the Romans that will be referred to as Foedus Cassianum capable of assimilating Romans and Latini in their rights. In other words, their rights were equated and the legal institutions that were available for Roman citizens were extended also to Latini in accordance with the new Foedus. Therefore, the Latini were not properly peregrini.
- 9.
The Twelve Tables were enacted in 450 B.C. and it can be said that they represented the main source of knowledge in Roman private law (Johnston 1999, p. 2), although the Twelve Tables did not survive and, therefore, we possess only a fragmented knowledge of them through the evidence provided by Cicero and Livy. Historically, in 462 B.C. there was an important power struggle between the plebeians and the patricians, who formed the two major social classes of the Roman population. In particular, the Tribune C. Terentilio Arsa, who was an official representative of the plebeians proposed to set up a special committee of five lawmakers (quinque viri legibus de imperio consular scribendis). Years later, in 457 B.C. the number of lawmakers grew to ten (decemviri) and the Tribunes enacted the Lex de Aventino publicando. In 451 B.C. the decemviri enacted the Twelve Tables. This was one of the most important achievements of the plebeians that they had for the first time a ‘codified law’ (indeed, the Twelve Tables were not a codification in the modern sense as for instance the Code Napoleon; it was more a sort of delimitation and specification of the ius as it was recognised as a completely formed entity before the enactment of the Twelve Tables). For the first time, this brought a form of legal certainty in the form of rights and delimitation of obligations that were written down into a law. This enactment has always been regarded as a quid unicum in Roman legal history (Grosso 1965).
- 10.
For enemy (hostis) meant to our ancestors what we now call ‘stranger’ (peregrinus). This is proved by the usage in the Twelve Tables: ‘or a day fixed for trial with a stranger’ (hostis). And again: ‘Right of ownership is inalienable for ever in dealings with a stranger’ (hostis). What can exceed such charity, when he with whom one is at war is called by so gentle name? And yet long lapse of time has given that word a harsher meaning: for it has lost its signification of ‘stranger’ and has taken on the technical connotation of ‘an enemy under arms’ (Miller 2016, paragraph 37).
- 11.
In particular, in the Ancient period the ius civile had a religious connotation that was specifically illustrated by the dominium that was expressed by the paterfamilias. The familia was an important minor social group of the initial Roman society and a bigger aggregation of people was centred on the gens. The gens as well as the familia were the initial aggregation of people who pre-existed the Roman society that was later called civitas and identified by its citizens, namely the cives. Indeed, it is inside the gens and specifically among the people who formed the gens, namely the gentiles that other social figures were identified in the so called clientes (essentially, vassals) who were under the protection of the patron and they were entrusted to his fides, namely they were in charge of looking after his lands and subject to particular duties such as the obsequium, the officium and the pietas (Grosso 1965). Furthermore, the ius civile was originally overlapping with fas. Therefore, the breach of fides was intended not only as a legal violation, but specifically as a reprehensible behaviour that was against the voluntas dei (Mousourakis 2007).
- 12.
Lesley Brown (1993), p. 908.
- 13.
Specifically, in Roman law and still today in modern Italian law (see article 1147 of the Italian Civil Code according to which: ‘è possessore di buona fede chi possiede ignorando di ledere l’altrui diritto’ that means the possessor in good faith is the one who has no intention to cause a prejudice to the right of a third party) there is a strict separation between possession and ownership, so that to get the possession of a specific item it is sufficient that the possessor acts in good faith from the moment he or she starts to possess otherwise the profits deriving from such item as well as the usucapio shall be prevented. This is to guarantee an ethical behaviour that is expressed into the subjective idea of good faith, namely the consciousness to possess without the intention to cause prejudice to any other third party in the following terms: ‘(…) el poseedor está protegido en su posesión con los interdictos. Si la posesión es de buena fe, el poseedor hace suyos los frutos. La possessio ad usucapionem hace que el poseedor mediante la prescripción adquiera la propiedad. El poseedor, por el hecho de serlo, conserva el objeto mientras se aclara la cuestión de su propiedad.’ Bravo González and Bravo Valdés (2004), p. 233.
- 14.
The principal difference between the Foedus Cassianum and an international treaty such as the one with Cartago was mainly focused on a different perspective of the commercial transactions. Indeed, in the Foedus Cassianum the validity of commercial agreements was recognised due to the shared values between Latini and Romans, while the treaties with Cartago immediately recognised the different ius of each city, therefore, different applicable laws to different citizens. Hence, the treaty became the legal instrument by which the rights of foreign populations were recognised by Romans.
- 15.
The Roman law of procedure is mainly divided into three stages in the light of Roman legal history: the period of the legis actio procedure, the period of the formulary system and the period of the cognitio extraordinaria. The legis actio procedure was literally an action based on the law. It means that if there was not a specific action in order to protect a particular interest of the plaintiff, the latter could not start a trial and borne the damage. The most important feature is that only Roman citizens were entitled to a legis actio (du Plessis 2010; Mousourakis 2007; Marrone 1994).
- 16.
In particular, the good faith or bona fides in this light was the outcome of the emergence of the consensual contract of sale (emptio venditio) that characterised this phase of the Roman legal history in terms of underpinning the Roman commerce with foreign populations. The new feature of this agreement was focused on superseding the formalities that were imposed and required in the stipulatio, namely the formal orally contract that was concluded by question and answer. Indeed, according to Johnston (1999, p. 80) there were at least three main advantages that the emptio venditio could achieve only through the good faith or bona fides that contributed to the production of automatic effects of the contract of sale. To this end, ‘(1) the seller impliedly warranted his title to the goods, so that the buyer who was dispossessed by a person who turned out to be the true owner was automatically able to sue the seller for breach of contract (…) this development illustrates the significance of the fact that sale was a ‘good faith’ contract. What this meant was that the parties’ dealings with one another were assessed in any eventual litigation on the basis of what good faith demanded; and so, without any need for adding further express promises or undertakings (…) (2) the seller impliedly warranted the quality of the goods. Initially the buyer took the risk of defects in the goods. If he wanted a guarantee against particular defects, he would have take it expressly by stipulatio. Only if the seller had fraudulently concealed the presence of defects in the goods would the buyer have a remedy, as this was of course a breach of good faith. (…) (3) Once agreement had been reached on the essentials of the contract, the object sold and its price, the risk of accidental loss or destruction passed to the buyer. (…) It has been regarded as strange that the buyer became liable at such an early point in the transaction, since he would not become owner until the goods were actually conveyed to him, for example by delivery. The result is that, at a time at which he did not own the goods, he was at risk if they were lost or destroyed in certain circumstances. (…) So the sorts of risk which the buyer assumed on conclusion of the contract were for destruction by earthquake, flooding or fire (so long as the seller was not responsible for it). (…) The terms just discussed were (ultimately) implied in every contract of sale. But it was possible to introduce further terms (‘pacts’) into the contract. This could be done without need for additional stipulation, because sale was a ‘good faith’ contract. One aspect of this was that, where the parties had entered into pacts in conjunction with the sale, the tenor of those pacts should be observed’.
- 17.
The praetor should be likened in contemporary terms to an international arbitrator in an international arbitration (Costa 1990).
- 18.
Indeed, fides was an ancient roman concept that existed even before the enactment of the Twelve Tables as it has been mentioned before especially in relation to the transfer of ownership by fiduciae causa in the solemn forms of mancipatio and the in iure cessio where the failure to give back the subject matter of the sale was considered a fraudulent act (i.e. a fraudatio) against the fides. So that the duty to give back the subject matter of the sale was originally based on the trust of the other party and later it was penalised as ut inter bonos bene agier oportere et sine frudatione. In particular, the mancipatio, the in iure cessio and the stipulatio were all formal agreements that were part of the ius civile as that law that was applied only between roman citizens (Marrone 1994). The most important of them because also the oldest that was later recognised by the Twelve Tables was the mancipatio that was used to transfer the ownership of goods as well as to acquire status rights (for instance, the will was made by virtue of the testamentum per aes et libra) and rights on people (a famous case was the coemptio of the woman, who became part of the family of the husband by virtue of the conventio in manum that was a form of mancipatio in relation to people).
- 19.
The praetor urbanus was a judge whose jurisdiction was empowered by the leges Liciniae Sextiae enacted on the 367 B.C. This judge had the imperium (the power) of dicere ius, namely the exercise of its jurisdiction was expressed by the pronunciation of at least one of these three verbs during the legis actiones: do, dico, addico (the so called tria verba praetoris). On the other hand, the praetor peregrinus was empowered to solve disputes related to commercial transactions between Romans and peregrini (Marrone 1994).
- 20.
The formula contained different elements some of them were essential in order to create a valid formula such as the nominatio (i.e. the appointment of the judge); the intentio (namely, the plaintiff’s claim); the demonstratio (it was a clause stating the facts) while others were facultative and they depend on the nature of the claim for instance the condemnatio (it was a statement directed to the judge, namely the apud iudicem phase to absolve or condemn the defendant; here if the subject matter of the claim was the quantification of an amount of money it usually contained the clause ex fide bona, therefore a sort of equity decision); the exceptio (essentially, the defendant’s specific grounds of defence and here the claimant should have insert a counter exception referred to as replicatio); and the praescriptio (namely, to limit the cause of action if the nature of the claim required this clause). For further reference see du Plessis (2010).
- 21.
As it has been translated by Edward Poste (1994, p. 25) in the following terms: ‘the rules prescribed by natural reason for all are observed by all nations alike, and are called gentile law’, namely the law of the gentes that are in this context intended as the different populations.
- 22.
Here the term ius is used in its objective understanding as ius civile and ius gentium (Bravo González and Bravo Valdés 2004, p. 29).
- 23.
Costa (1990).
- 24.
Jolowicz (1957).
- 25.
The passage of Ulpian is reported in the Corpus Iuris Civilis of the Emperor Justinian under D.1.1.1.pr.: ‘(…) celsus definit, ius est ars boni et aequi’. Furthermore, Ulpian continues to describe what does this sentence mean under D.1.1.1.1: ‘Cuius merito quis nos sacerdotes appellet: iustitiam namque colimus et boni et eaqui notitiam profitemur, aequum ab iniquo separantes, licitum ab illicito discernentes, bonos non solum metu poenarum, verum etiam praemiorum quoque exhortation efficere cupientes, veram nisi fallor philosophiam, non simulatam affectantes’.
- 26.
To this end, the aequum under Roman law was close to the equity conception of ancient Greeks. Furthermore, on this understanding of equity as a form of correction of the law is not by chance that in England the equitable jurisdiction was initially implemented by the common law courts, and only later by the special court of the Chancery. This in order to distinguish how equity was applied as a form of justice in order to correct the law, but was never considered as a law itself.
- 27.
Cuniberti (2014).
- 28.
Article 7 (1) CISG: “In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade”.
- 29.
Bianca and Bonell (1987).
- 30.
Mazzetta (2014), p. 127.
- 31.
On this point, it is interesting to note how the same author (Mazzetta 2014, p. 128) on CISG Article 7 (1) mentions the 2008 UNCITRAL Digest of case law on the CISG comments on good faith that although good faith is expressly referred to only in article 7 (1) there are numerous rules in the Convention that reflect the good faith principle. In particular article 16 (2) (b), 21 (2), 29 (2), 37 and 46, 40, 47 (2), 64 (2), 82, 85 and 88.
- 32.
Subsequently, two other editions were released respectively in 2004 and 2010.
- 33.
According to section 1.7 Unidroit Principles 2010: ‘(1) Each party must act in accordance with good faith and fair dealing in international trade. (2) The parties may not exclude or limit this duty.’
- 34.
The next paragraph will illustrate the difference between general principle and general clause.
- 35.
Beale (2008), p. 11.
- 36.
According to section 1:201 of the Principles of European Contract Law: ‘(1) Each party must act in accordance with good faith and fair dealing. (2) The parties may not exclude or limit this duty’.
- 37.
In December 2015, the European Commission proposed a directive on contracts for online and other distances sales of goods (online sale of goods directive) and a directive on the supply of digital content. In particular, the first act was intended to replace the existing Consumer Sales Directive with regard to distance sales (both online and offline).
- 38.
CESL Preamble, recital 31: “The general principle of good faith and fair dealing should provide guidance on the way parties have to cooperate. As some rules constitute specific manifestations of the general principle of good faith and fair dealing, they should take precedent over the general principle. The general principle should therefore not be used as a tool to amend the specific rights and obligations of parties as set out in the specific rules. The concrete requirements resulting from the general principle of good faith and fair dealing should depend, amongst others, on the relative level of expertise of the parties and should therefore be different in business-to-consumer transactions and in business-to-business transactions. In transactions between traders, good commercial practice in the specific situation concerned should be a relevant factor in this context. The general principle of good faith and fair dealing should set a standard of conduct which ensures an honest, transparent and fair relationship. While it precludes to a party from exercising or relying on a right, remedy or defence which that party would otherwise have, the principle as such should not give to any general right to damages. Rules of the Common European Sales Law constituting specific manifestation of the general principle of good faith and fair dealing, such as avoidance for fraud or the non-performance of an obligation created by an implied term, can give rise to a right to damages, but only in very specific cases”.
- 39.
CESL, Article 2: “1. Each party has a duty to act in accordance with good faith and fair dealing. 2. Breach of this duty may preclude the party in breach from exercising or relying on a right, remedy or defence which that party would otherwise have, but shall not give directly to remedies for non-performance of an obligation”.
- 40.
CFR, Book I, Section 1:102 “Interpretation and development”: ‘(…) (3) In their interpretation and development regard should be had to the need to promote: (a) uniformity of application; (b) good faith and fair dealing; and (c) legal certainty’.
- 41.
CFR I – 1:103: “1. The expression “good faith and fair dealing” refers to a standard of conduct characterised by honesty, openness and consideration for the interests of the other party to the transaction or relationship in question. 2. It is, in particular, contrary to good faith and fair dealing for a party to act inconsistently with that party’s prior statements or conduct when the other party has reasonably relied on them to that other party’s detriment”.
- 42.
Beale (2008).
- 43.
Schipani (1999).
- 44.
In accordance with section 9 Law, 18 June 1998, n. 192 on the subcontracting, it is expressly provided that the agreement by which it is committed the abuse of economic dependence between enterprises is void because it is against the principles of good faith and fair dealing in commercial relations. The instance of subcontracting is considered as having a general application to any other commercial contract that is characterised by information asymmetry between enterprises (Russo 2009), although this conclusion is not completely accepted by the Italian jurisprudence.
- 45.
Under the Law, 6 May 2005, n. 129 on the Franchising Agreement, the franchisor has to behave in good faith and in a fair fashion in order to protect the interests of the franchisee. In particular, the good faith must be observed during the negotiation of the franchise agreement (i.e. pre-contractual phase) as well as after entering into the agreement. Furthermore, the good faith during the negotiation phase is characterised by a specific information duty that must be followed by the franchisor.
- 46.
In particular, section 7 of the Legislative Decree, 9 October 2002, n. 231 (the Italian national act of implementation of Directive 2000/35/EU on combating late payment in commercial transactions) provides that if a term on the payment date or on the effects caused by a late payment is unfair and it is expressly against the interests of the creditor, then the contractual clause is void by taking into account the commercial practices, the conditions of the private parties and the commercial relationships between them. Therefore, the Italian judge in the case of an unfair term in relation to payment conditions is entitled either to declare the nullity of the entire agreement as well as to save the contractual effects of the clause by intervening in its discretion to modify the term and rebalanced the interests of the parties to guarantee a fair dealing (D’Adamo 2004).
- 47.
In addition to this role of the judge to restore good faith between contractual parties, it is also interesting to highlight that under Italian law the factoring discipline is permeated by the good faith that is interpreted as a general clause under articles 1175 and 1375 of the Italian Civil Code. Indeed, in a factoring agreement the debtor has to inform the factor in relation to the inexistence of the credit and the omission to provide such information can generate a contractual responsibility in order to protect the trust of the factor (Breccia 1991, p. 376).
- 48.
Article 1337 of the Italian Civil Code states that: “Le parti, nello svolgimento delle trattative e nella formazione del contratto, devono comportarsi secondo buona fede”.
- 49.
According to Hesselink (2011, p. 619): ‘most systems make a distinction between subjective good faith and objective good faith. Subjective good faith is usually defined as a subjective state of mind: not knowing nor having to know of a certain fact or event. It is of relevance particularly in property law (bona fide acquisition). Objective good faith, the concept that the general good faith clauses refer to, is usually regarded as a norm for the conduct of contracting parties: ‘acting in accordance with or contrary to good faith’. Some systems have even emphasized this distinction by introducing separate terminology for objective good faith (Treu und Glauben, correttezza, redelijkheid en billijkheid). In France, however, such a distinction is not usually made. The English common law traditionally does not recognise a concept of objective good faith. However, the concept has recently been introduced into English law by statute [it is the Unfair Terms in Consumer Contracts Regulations 1994 in order to implement the Directive 93/13/EEC]’. It is interesting to highlight, how the English common law as the Italian law have constructed the principle of good faith as a form of social justice to be imposed directly by the lawmaker.
- 50.
Roppo (2001), p. 175. In particular, this objective dimension of the good faith that is imposed through a paternalistic approach implemented by the State must be differentiated under Italian law from a subjective dimension of good faith that is centred only on subjective intentions of contractual parties and their subjective state of mind (Roppo 2001, p. 176; Piraino 2015, p. 1). In other words, it means that in the former circumstance the lawmaker has imposed the good faith as a general clause to restore justice in a contractual relationship, whereas in the latter case the lawmaker has only recognised the good faith as a subjective state of mind of the party in terms of its ignorance or false configuration of an economic interest by which the law connects the production of legal effects. For instance, in the agency contract under Italian law the principal cannot benefit from the state of ignorance or good faith by which the agent has acted on its behalf in accordance with article 1391, second paragraph, of the Italian Civil Code. This circumstance can directly show how the good faith constructed in subjective terms can prevent possible frauds. Furthermore, it should be highlighted as the good faith constructed in subjective terms is never capable of diminishing or avoid the application of good faith in objective terms that is imposed directly by the lawmaker (Roppo 2001, p. 176).
- 51.
Under Italian law the law maker has provided two specifications of the general principle of good faith through professional diligence (article 1176 of the Italian Civil Code) and information duties in the negotiations of the contract (article 1337 of the Italian Civil Code). Specifically, good faith and correctness under Italian law are overlapping concepts when the lawmaker and the interpreter make reference to the good faith in objective sense (articles 1175 and 1375 of the Italian Civil Code). Therefore, the judge when is referring to the principle of good faith under Italian law is always considering the objective dimension of good faith (Gallo 2009).
- 52.
See articles 3, 4 and 5 of the Directive 2002/65/EC.
- 53.
Indeed, under article 1337 of the Italian Civil Code: ‘Le parti nello svolgimento delle trattative e nella formazione del contratto devono comportarsi secondo buona fede’. For this reason, the information duties in the negotiation phase are an essential aspect of the good faith in an objective sense and the provision of the Italian Consumer Code can also be seen as a specification of the general provision that is contained in the Italian Civil Code.
- 54.
Article 3 (2) Directive 2002/65/EC: ‘The information referred to in paragraph 1, the commercial purpose of which must be made clear, shall be provided in a clear and comprehensible manner in any way appropriate to the means of distance communication used, with due regard, in particular, to the principles of good faith in commercial transactions, and the principles governing the protection of those who are unable, pursuant to the legislation of the Member States, to give their consent, such as minors.’
- 55.
Article 2 of the Italian Constitution: “La Repubblica riconosce e garantisce i diritti inviolabili dell’uomo, sia come singolo, sia nelle formazioni sociali ove si svolge la sua personalità, e richiede l’adempimento dei doveri inderogabili di solidarietà politica, economica e sociale”.
- 56.
Bianca (2004), p. 102.
- 57.
Piraino (2015), p. 44.
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D’Alvia, D. (2018). From Public Law to Private Law: The Remarkable Story of bona fides. In: Heidemann, M., Lee, J. (eds) The Future of the Commercial Contract in Scholarship and Law Reform. Springer, Cham. https://doi.org/10.1007/978-3-319-95969-6_13
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