22 Dec 2022


What is Good Faith?

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Academic level: College

Paper type: Essay (Any Type)

Words: 321

Pages: 1

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The definition of good faith is not uniform, varying in terms of differences in jurisdiction; however, there is an amended definition which has been adopted by a majority of states. Good faith refers to honest intentions to faithfully perform duties and obligations, observe fair dealing standards, and abstain from taking advantage of others. The concept of good faith is of the essence to all business transactions and is a crucial part of the moral structure of society (Dawkins, 2014). The term should be applied to day-to-day practical activities to promote justice, sincerity and honesty among individuals or parties involved. The Uniform Commercial Code ensures that buyers and sellers observe the set standards of good faith during a commercial transaction for the sale of goods. The buyer, seller, and the customs in the industry negotiate the contract terms; additionally, they must cooperate and perform under such conditions established in good faith. 

A person who observes good faith during purchase is under the protection of the Uniform Commercial Code. For instance, if a merchant can prove that he or she purchased the goods in good faith, then he or she may keep products bought from a seller who did not own the goods. The merchant only ought to demonstrate having been honest in the transaction conducted and must have observed the standards of fair dealings as set in their respective state (Cassim, 2013). However, if there are suspicions on the circumstances that the purchase took place, a court might conclude that the buyer did not observe good faith. Additionally, failure to conduct transactions and perform duties and obligations in good faith is considered a breach of that contract. The buyer may seek compensation for damages caused by a breach of contract under the law. Therefore, it is upon the two parties to ensure that neither party shall go about doing anything that will negatively affect the right of the other party, in order to see a successful end of the contract. 

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Work Cited 

Cassim, M. F. (2013). The statutory derivative action under the Companies Act of 2008: The role of good faith. South African Law Journal, 130, 496-526. 

Dawkins, C. E. (2014). The Principle of Good Faith: Toward Substantive Stakeholder Engagement. Journal of Business Ethics, 121, 2, 283-295. 

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StudyBounty. (2023, September 16). What is Good Faith?.


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