Essay On Good Faith

A house wren is making a nest in the wreath on our front door. When my wife and I want to go out on the porch, we make sure to knock on the inside of the door just in case the wren is there—just a little knock to warn her. We’re only six months married, our half-year anniversary—newlyweds at the ages of sixty-one and fifty-nine—and this is the life we dreamed all the long years when we lived unhappily with other people in our separate houses. Perhaps we don’t deserve our happiness—we who hurt others along the way to get here—but this is a home of windows and light, and each morning, when I wake, I give thanks. We’ve come here to spend what time we have left together. Cathy has made a wreath of silk flowers, and in the bottom of that wreath, a wren has found a place to build her nest.

Summers, when I was a boy, sparrows sometimes came down the chimney on our farmhouse and scrabbled around inside the stovepipe before flying out through the damper. There they were, amazed and frightened by being where they’d never intended to be. They made frantic flights, swooping and rising around our living room. I was a sensitive child, and they terrified me. What was I afraid of? Perhaps it was the unpredictable nature of those flights—from ceiling to curtain rod and lower still. Who knew where those birds might end up now that they’d crossed over into the human world? I’m really not sure. I only know I couldn’t be inside the house when a bird was loose. I waited in the yard until my mother was able to shoo it out with a broom. To this day, I’m uneasy when a bird happens to be flying around inside an airport, a gymnasium, a shopping mall.

But who can know the restless heart and how it looks for home? My great-great-grandmother, Betsy, was born in Nicholas County, Kentucky, in 1810. From there, she traveled to Brown County, Ohio, and then on to Lawrence County, Illinois, where she died in 1867. She died from bronchitis after being bedfast for a year. Before her health failed, she was a weaver. I like to think of her at her loom in her log house on a sunny Indian summer day in October—the month of my birth, the month of her death. I imagine yellow leaves on the hickory trees, a warm breeze from the south, dust motes moving about in the sun’s rays. I want to think she loved her life. I want to think the sound of the loom was a happy noise, the threads interlacing into whole cloth, warp and weft coming together as one.

My wife and I first loved each other when I was eighteen and she was sixteen. Then we went our separate ways, as young lovers are apt to do, and had separate lives before finding our way back to each other. Here we are at a time of new beginnings; here we are at spring. A wren is making a nest at our door, and this morning we’ve discovered that a mallard hen is sitting on ten eggs in the catmint along the side of the house.

We’re getting ready to leave for a weekend trip, and Cathy has forgotten a book she wants to take. While she goes back into the house to get it, a duck flies into the catmint. When I tell her what I’ve seen, she goes to investigate. She’s bent over, moving down the row of catmint, when suddenly the duck flies up, her wings riffling right in front of Cathy’s face. She jumps back, startled. “Holy shit,” she says. Amazed, surprised, delighted.

That’s when I want to tell her. Long ago, I made a place in my heart for you. Tended it, kept it alive. Now here we are in this place where the wren and the mallard have come in good faith. I need no other signs to know that trust binds us. The wren has woven a nest from twigs. The mallard’s instincts tell her waiting is the only thing she need do. Here will be the place of birth. New life is ours in time. I made a place in my heart for you, dear Cath, and finally we found our way home.

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Lee Martin is the author of the novels The Bright Forever, a finalist for the 2006 Pulitzer Prize in Fiction; River of HeavenQuakertownBreak the Skin; and Late One Night. He has also published three memoirs: From Our HouseTurning Bones, and Such a Life. His first book was the short story collection, The Least You Need To Know, and a new collection, The Mutual UFO Network, is forthcoming. Also forthcoming is a craft book, Telling Stories: The Craft of Narrative and the Writing of Life, from the University of Nebraska Press.  His fiction and nonfiction have appeared in such places as Harper’s, Ms., Creative Nonfiction, The Georgia Review, The Kenyon Review, Fourth Genre, River Teeth, Brevity, The Southern Review, Prairie Schooner, Glimmer Train, The Best American Mystery Stories and The Best American Essays.  He is the winner of the Mary McCarthy Prize in Short Fiction and fellowships from the National Endowment for the Arts and the Ohio Arts Council. He was the winner of the 2006 Alumni Award for Distinguished Teaching from Ohio State.

Photo by Dinty W. Moore

Good faith in Australia has been somewhat a controversial issue for some time now. The absence of any statute on the topic has furthered the uncertainty in apply this doctrine. The COAG had an opportunity during the construction of the Australian Consumer Law to insert into it’s definition of unfair terms in s23 a requirement of Good Faith to mirror the position in the EU; however, they considered the doctrine too vague and refused to recognise it. Thus, the concept of GF has been left to the Judiciary to decide in a piecemeal fashion. While some courts have expressly accepted an obligation to operate in good faith, the High Court chose to leave the issue open in Royal Botanic Gardens with Kirby J expressing reservations of the doctrine as a whole. His reservations were that Good Faith (GF) is inconsistent with conception of economic freedom; that of caveat emptor: the buyer alone is responsible for checking the goods. The issue in Royal Botanic was left open because it was unnecessary to do so. Though the High court declined to decide this issue conclusively, there is a wealth of case law in lower courts (particularly in the NSW Supreme Court) that recognise a duty of good faith as a matter of law. The origin of GF generally stems from Renard Constructions, where it was said in dicta that parties should act in good faith when carrying out contractual obligations in all contracts. Though there was much uncertainty as to the notion of GF itself, some support can be found in Allsop J’s article where he linked the notion of Good faith with that of fidelity to the bargain and fair dealing: the free exercise of will by the parties and recognition of the context they operate in. He further notes that GF’s central notion is that of honesty and cooperation. He recognises that in all contracts there should be some imposed standards of conduct, central to which is a duty to act honestly and reasonably. In this way, GF underlies the body of Contract law in Australia. Mason J recognises in his article 3 elements for GF to operate: loyalty to the bargain; compliance with honest standards of conduct and compliance with standards of conduct having regard to the parties’ intent. Clearly, there is a structure to the notion of GF genrerally. Whether it is linked to the duty to cooperate or the duty in commercial contracts to operate honestly, it can be seen that the concept of GF is not too vague so as to not be implied in contracts. It is important to note that the issues with GF only arise when implying that notion into contracts generally. It has been noted in Coal Cliff Collieries that an express duty of good faith will be enforceable and certain as long as it is part of a clear, undoubted promise (accepted and applied in Aiton). In that case, a clause requiring the parties to proceed in good faith until a more formal agreement was drawn up was held to be enforceable. Similarly in Strzelecki Holdings, the parties in not coming to a consensual negotiation did not breach a clause requiring parties to negotiate in GF. As shown, an express obligation to act in GF will be upheld. In Strzelecki the judges accepted Mason’s definition of GF and may provide a platform for other cases to be built on. Thus, express terms can be enforceable not in cooperation of the contract, but in performance of the obligations of the contract (Hooper Bailie). While express terms can be enforceable, promises to negotiate in GF are illusory and amount to nothing but an agreement to agree (Coal Cliff). A principal issue arises in determining whether to include GF as a matter of law or a matter of fact. The main problem in implying the duty as a matter of law is that courts are unable to decide the case with regards to the special circumstances of the case (i.e. intentions, pre-contractual conduct etc). Whether it is implied in law or in fact will be ultimately be determined by the understanding that the courts have of the notion of good faith. Allsop notes that before any expression of law can be implied as a general basis to all contracts, it must operate out of commonsense. Is it commonsense that parties should cooperate with each other in a contract? The judges in Secured Income thought so and thus implied a duty for parties to cooperate, or operate in a reasonable way so as to complete the contract, in all contracts. The notion of cooperation is inextricably liked to that of GF and may provide the basis for implying a term of GF into all contracts. Problems with implying in fact and in law In law: Implying a contract in law means that the contract is not sensitive to the circumstances of the parties or the wording of the contract. It is an all or nothing approach; either the contract is in Good Faith or it isn’t. There is no scope for considering the content of the contract. (Allsop) In fact: Basing the doctrine on implication in particular circumstances permits sensitivity to the aspirations of the parties, the relationship of the parties and the factual matrix in which they operate. It allows the judges to define GF as the case requires and considers intentions. BK v HJ: Good faith in exercising powers in agreement? Yes, breached this when terminating the agreement. Though it was not expressly mentioned in that case, some cases cited this as the basis for implying GF in all commercial contracts (in law)  confirmed in Vodafone Pacific. Vodafone Pacific: Good faith in exercising powers? Yes, but only in certain cases and urged caution in approaching the doctrine in this way. Must give regards to the contractual context. (supported in Esso) Good faith can be excluded provided that its exclusion is expressly set out and clear. As in Vodafone where the contract set out that the agreement was to ‘exclude all implied terms’. The court held this to be sufficient to exclude GF (court considered it anyway as it wanted to distance itself from the decision in BK v HJ which was being used to imply a duty of GF in all commercial contracts. Good Faith Generally, parties should do all things necessary to enable the other party to have the benefit of the contract (Secured Income v St Martins), but this does not mean giving into the demands of the other party (Strzelecki Holdings v Cable Sands). Also, negotiating parties owe each other no fiduciary relationship, as they are not required to act in the interests of the other party (United Rail Group Services per Alsop J). Implied obligations Generally, there is no implied duty to negotiate in good faith; however, D must not make misrepresentations/false statements (Watford v Miles – one party locked out from selling but sold anyway. Did they have an implied obligation to negotiate in good faith?) Generally, good faith is governed by estoppel and is an expectation that the parties will do what they say they will do and not make misrepresentations. ACT v Cundry - Had to get approval by the ACT govt. Coal Cliff Collieries v Sijehama - In a complex joint venture for a coal mine, the parties agreed to proceed in ‘good faith’ and in consult until a more comprehensive venture agreement was formalized  Agreement to proceed was oral. - Held: o A promise to negotiate in good faith will be enforceable depending on the precise terms of the promise and the particular construction of the contract.  Because of the complexity of the case, the issues to be resolved were too crucial to warrant the use of a vague concept to fill these gaps o A promise to negotiate in good faith may be enforced where the promise is clear and part of undoubted agreement between the parties. Otherwise, good faith is too vague to enforce on a crucial aspect of a parties’ commercial relationship. Aiton v Transfield - Application of Coal Collieries - Clause of contract set out dispute resolution process (external arbitrator) plus obligations to negotiate in good faith - Held: o The promise to negotiate in good faith was enforceable (part of some wider arrangement  certain) o However, the agreement failed to set out remuneration of the arbitrator and was void for uncertainty. o The express obligation to act in good faith was not uncertain as it was attached to some wider arrangement. Express terms to negotiate can be enforceable as part of a wider arrangement such that it can be stated with sufficient certainty. Strzelecki Holdings v Cable Sands - Parties were negotiating over the sale of land which needed to be repaired before an agreement was made  entered a MOU CL 9: if parties acting in good faith cannot come to an agreement for the sale and purchase of all land between themselves within 30 days…the MOU would cease to be of force Parties could not reach an agreement within the 30 days. Claim: o S claimed CS was acting unreasonably during negotiation and therefore was not acting in good faith (not coming to an agreement within 30 days) Issue: o Whether CS breached their express obligation to act in good faith by not coming to an agreement? Held: o Accepted Sir Anthony Mason’s three notions of Good Faith:  Obligation to cooperate in achieving contractual obligations (loyalty to promise) (ACT v Cundry)  Compliance with honest standards of conduct  Compliance with standards of conduct reasonable having regard to the parties’ intent.  However, the last one is questionable, as it does not refer to any standards of conduct. At least in the second one, there is a requirement of ‘honesty’ o Agreed with Einstein J in Aiton, that parties negotiate in good faith by:  Subjecting themselves to the process of negotiation  Keeping an open mind to the other party’s suggestions.  To deal with each other in this fashion would show loyalty to the MOU (United Rail) o On the facts, there was deemed to be No Breach o Parties should be given some self-interested freedom during negotiation. Simply because one party’s offer may have been unreasonable to another party or the court, does not mean that the rejection of that offer amounts to bad faith or lack of honesty (provided that negotiations are not called off in the process of rejection)

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