CHAPTER 8 -- Interpretation, Construction and good faith (II)

Question 1

When is construction applied

Answer 1

when there is an issue in the wording of the contracts and the solution can’t be found - construction. Also when there are gaps missing

Question 1

what are default rules

Answer 1

these rules are found in statutes and are the typical way to construct the gaps. Provide a standard solution

Question 2

Construction in france?

Answer 2

is called ‘ Creative Interpretation’ - focuses on the hypothetical common intention of the parties

Question 3

Construction in Germany?

Answer 3

is called ‘ Supplementing the interpretation of the contract’ - needs to be interpreted in good faith. And the customary practice

Question 4

Construction in England?

Answer 4

is called ‘Terms implied in Fact’ - 2 ways: 1. Oh of course test! Too obvious. 2. Business efficacy test. –> make the contract more effective and operational they add a term. However, judges are reluctant to rewrite contracts

Question 5

What is good faith?

Answer 5

Parties take into account each other’s interests. Civil law

Question 6

Subjective good faith?

Answer 6

the actual state of mind of a person who ignores or does not have a reason to know a certain fact, as in the case where he relies on the other party to be legally bound

Question 7

Objective good faith?

Answer 7

contracting parties must operator with reasonableness and fairness oil its dealings

Question 8

what are the 3 functions of good faith?

Answer 8

1. Supplementing function
2. Interpretative function
3. Restrictive function

Question 9

Why in English law there is no principle of Good Faith

Answer 9

self-interest dealing - interests of economic efficiency and trade

Question 10

Where can good faith appear in English law

Answer 10

1. Utmost good faith contracts - for employment, and insurance. The duty of utmost good faith requires a high level of openness, honesty, and transparency between the parties. It goes beyond the general duty of good faith present in many contracts. utmost good faith contract are obligated to disclose all material facts that could influence the decision-making of the other party. This includes information that might affect the performance of the contract or impact the interests of the other party.
2. Fiduciary Relationship: acting on behalf of another. Directly related to good faith - financial advisor, lawyers, doctors.