# Good faith

Source: https://contracko.com/glossary/good-faith

# Good faith

The duty to act honestly and reasonably in forming and performing a contract.

## 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.

### How Contracko helps

Contracko's AI review identifies contractual provisions that appear incomplete or that create gaps a court might fill by implication. Version history and obligation tracking provide a contemporaneous record of how a contract was performed, which is relevant context if a good-faith dispute arises later.

## Legal references

- [BW 6:248 Dutch Civil Code: supplementary and derogating effect Dutch law](https://wetten.overheid.nl/BWBR0005289)
- [BW 6:2 Dutch Civil Code: reasonableness and fairness between parties Dutch law](https://wetten.overheid.nl/BWBR0005289)

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.

## Relevant for

[Legal Services](https://contracko.com/industries/legal-services)[Consulting](https://contracko.com/industries/consulting)[Commercial Real Estate](https://contracko.com/industries/commercial-real-estate)

## Related clauses

- [Entire Agreement Clause](https://contracko.com/clause-library/entire-agreement)
- [Severability Clause](https://contracko.com/clause-library/severability)
- [Dispute Resolution Clause](https://contracko.com/clause-library/dispute-resolution)

## Related terms

- [Breach of contract](https://contracko.com/glossary/breach-of-contract)
- [Representation](https://contracko.com/glossary/representation)
- [Rescission](https://contracko.com/glossary/rescission)
- [Clause](https://contracko.com/glossary/clause)

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## Frequently asked questions

Common questions about this term.

- **Q:** Can good faith override the written words of a contract?
  **A:** Exceptionally, yes. Under article 6:248(2) BW a clause may be set aside where applying it would be unacceptable by the standards of reasonableness and fairness, but courts use this power sparingly.

- **Q:** Does good faith impose pre-contractual obligations?
  **A:** Yes. Under Dutch law, parties in negotiations have obligations of good faith towards each other: a duty to provide material information and, in certain circumstances, a duty not to break off negotiations arbitrarily.

- **Q:** How is good faith different from equity in English law?
  **A:** English law has no general good-faith doctrine in contracts; it uses specific equitable doctrines (estoppel, unconscionability) case by case. Dutch law applies redelijkheid en billijkheid systematically as an overarching principle for all obligations.

- **Q:** Can parties exclude good faith by contract?
  **A:** No. The supplementary and derogating effect of good faith under BW 6:248 is a mandatory principle; it cannot be contracted out of. Parties can shape their obligations in detail, but a court can always apply good faith where applying agreed terms would be unacceptable.

- **Q:** What is the Haviltex standard and how does it relate to good faith?
  **A:** The Haviltex standard (HR 1981) is the Dutch rule for contract interpretation: meaning depends on what parties reasonably could and did expect from each other, not just literal text. It is an expression of good faith applied to the interpretation stage.

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