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Rolandas Balčikonis

Abstract

The new Civil Code of Lithuania incorporated the criteria of justice, reasonableness and good faith into the civil legal relations. These criteria can be called general clauses the exact content of which cannot be determined by the common words that express those norms. The authors of the Commentary of the Civil Code, explaining the content of the principles of justice and reasonableness, make use of the principle of good faith; besides, they maintain that further clarification of these principles must be made by legal practice and doctrine.
This article analyzes the content of the principle of good faith in the law of contracts. The author also looks at analogical legal norms of foreign countries (Germany, Holland, USA) and their application.
Despite the formal inadequacy, both in common and civil law systems, the good faith is ascribed the following functions referred to as “internal” by the author: (i) supplementing the contents of a contractual obligation, (ii) internal limitation of contractual rights’ exercise, and (iii) enabling the court’s law-making freedom. None of the legal systems presents the final list of obligations constituting the contents of good faith.
The author draws one’s attention to the fact that both German and Dutch legal doctrines divide good faith into subjective and objective one, and use different common words or their combinations to describe them. The subjective good faith has a specific content, and it is related only with a person being aware of, or obliged to be aware of something. Following this argument, it must be said that the authors of the Civil Code of the Republic of Lithuania have a different opinion.
The creditor, having made a contract, acquires two rights of different kind: (i) an absolute right with a specific content into each and every third party and (ii) a relative right to his or her contractual debtor. The double nature of the creditor’s rights requires different concepts of the debtor’s and third parties’ good faith.
The systematic evaluation of the Civil Code norms presupposes that the third party would be always held honest if he or she did not know or did not have to know that the transaction that he or she was making could violate the rights of the contracting creditor. The contractual debtor is held honest if he or she is faithful to the execution of the contract (by undertaking new and additional positive or negative duties) as long as this is just and reasonable. This way the good faith can be divided into two kinds: (i) good faith of the third party, and (ii) good faith of the debtor. Good faith of the third party in its essence is analogical to the Dutch and German subjective good faith, while good faith of a contractual debtor – to the subjective one.
In general, good faith is most close to the Catholic concept of loyalty. This is the principal of good faith what creates a new obligation to a contractual debtor. Obligations cannot be absolute – they are limited by independent principles of justice and reasonableness. Thus, the analysis of good faith without the evaluation of principles of justice and reasonableness would be incomplete.
The proposed concept of contractual good faith in every specific case of application of the principle of good faith requires (i) to name a specific new and additional positive or negative obligation that arises for the debtor, and (ii) to analyze the relationship of this duty with the principles of justice and reasonableness. According to the author, this point of view could allow to control the use of court’s discretion right.

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