Good faith

Definition

Good faith is the principle that parties must deal honestly, fairly, and reasonably with one another, both when negotiating and when performing a contract. In Dutch law this is the central doctrine of redelijkheid en billijkheid: under article 6:248 it can supplement the contract with additional duties and, in exceptional cases, set aside a clause that would be unacceptable to apply. Article 6:2 extends the same standard to all obligations between parties.

Example

A party tries to enforce a clause to the letter in a way neither side ever intended; a court may set it aside as contrary to reasonableness and fairness.

Why this is a business risk

Good faith is a double-edged principle. It can protect you when a counterparty exploits a technicality, but it also creates implied obligations that go beyond the written text. Businesses that rely on the literal wording of a clause to avoid responsibilities that any reasonable person would expect them to honour may find courts unwilling to enforce that position.

How to manage it

• Draft contracts with the intent of the parties clear on paper, so there is no room for a court to imply a different obligation.
• When a contract becomes difficult to perform, communicate early and in writing rather than simply defaulting; courts look at the conduct of both parties.
• Review long-term contracts periodically to check whether changed circumstances have created a gap that good faith might fill in an unexpected way.

Legal references

• BW 6:248 Dutch Civil Code: supplementary and derogating effect Dutch law
• BW 6:2 Dutch Civil Code: reasonableness and fairness between parties Dutch law

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.