The Duty of Good Faith and the Security of Performance

• Main Author: HUNTER, Howard
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 1993
• Subjects: Commercial Law; Contracts
• Online Access: https://ink.library.smu.edu.sg/sol_research/2223; https://ink.library.smu.edu.sg/context/sol_research/article/4175/viewcontent/DutyGoodFaithSecurityPerformance_1993_JCL.pdf
• Institution: Singapore Management University

John Carter's paper provides a good discussion of many fundamental problems associated with the satisfactory enforcement of contractual obligations. In reviewing the various subtopics of the conference, he posits a scale of 'security' for performance that runs from simple reliance on the promisor's word to that of the chattel or real property mortgage with maximum rights of self-help in the promisee. In this commentary on his paper, I will argue that the greatest security for any promisee remains the word of the promisor and that this is so for reasons beyond those of honour. First, the duty of good faith imposes on contracting parties an obligation, independent of their mutual covenants, to perform their undertakings. Second, this same duty of good faith often imposes limitations on the self-help remedies of a secured party, especially when it is coupled with the general dislike of forfeiture. Third, the duty of good faith is consistent with the usual expectations of contracting parties in a commercial setting who rely more often on the development of long term relationships of trust and predictable performance than on the security of proprietary interests.