Good Faith in Australian and European Contract Law - Theory, Comparison and Reform

Author: Jessica Viven

Viven, Jessica, 2019 Good Faith in Australian and European Contract Law - Theory, Comparison and Reform , Flinders University, College of Business, Government and Law

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This thesis compares the development of different applications of the doctrine of good faith in contractual relations in the EU and in Australia. In these two legal systems, good faith has been used to address pressing issues of economic development, but the two jurisdictions struggle to implement good faith as a broad principle applicable to all contracts. This thesis investigates the development of the doctrine of good faith in each of these two jurisdictions.

The research uses the comparative law methodology in order to identify core similarities between the two jurisdictions. The latter include their trade relations, their shared history and federal-like characteristics, as well as their common struggle in regulating contracts and fair dealing. It then moves on to compare the topical applications of good faith in contract law and to identify the foundations for such application.

The first finding of the research is that there is a clear difference in the way good faith is approached in these two jurisdictions. The EU is pushing the integration of good faith through a top-down approach, driven by EU institutions. In Australia, however, a bottom-up approach, driven by private stakeholders and contractual parties, has been developing. The second finding concerns the clear distinction between business-to-business and business-to-consumer contracts. The EU has used good faith mostly to strengthen consumer protection within the internal market while Australia has associated good faith with some commercial transactions. The third finding shows that in spite of different approaches, both jurisdictions are facing the same issue of fragmentation of the rules and the development of a specialised law of contracts. In the EU, topical applications of good faith in some directives are influencing member states and the domestic integration of good faith but only for certain contractual relations. In Australia, industry specific codes of conduct are being enacted that recognise the duty to act in good faith in particular commercial transactions. The thesis argues that this fragmentation of the general law of contract and the topical applications of the doctrine of good faith are counterproductive to the promotion of trade and cross border exchange, and create uncertainty.

The thesis challenges this trend by proposing to integrate good faith as a mandatory and enforceable principle applicable to all contracts no matter the identity of the parties or the purpose of the transactions. The development of a model based on the experience in Australia and the EU indicates that this research promotes fair dealing. The thesis acknowledges that the success of the recognition of this principle is dependent on the will and drive of different actors through different legal instruments. This research defends the need for such competition of norms to occur to promote a cohesive approach to promote good faith as a general principle of contract law.

Keywords: good faith, contract law, Australia, European Union, principle, relational contract, morals, remedies, small business, consumer, legal history

Subject: Law thesis

Thesis type: Doctor of Philosophy
Completed: 2019
School: College of Business, Government and Law
Supervisor: Dr Sulette Lombard