A Legal Chameleon: An Examination of the Doctrine of Good Faith in Chinese and American Contract Law

Abstract

When China promulgated its first comprehensive contract law a decade ago, it adopted the doctrine of good faith as a basic principle of contract law. The Contract Law of the People’s Republic of China (“Chinese Contract Law”) currently requires that parties observe good faith as a general principle. United States contract law has also generally recognized the doctrine of good faith as a “fundamental concept of modern contract jurisprudence.” Advocates on both sides of the Pacific praise the doctrine for its elasticity and adaptability, which allow courts to use the doctrine to fill in legislative and doctrinal gaps when necessary. Critics on both sides of the Pacific criticize the doctrine for these same qualities, which they believe render the doctrine open to abuse by courts and parties. With the same criticisms and praises being levied both in China and the US, one US legal scholar has suggested that the Chinese doctrine of good faith is “identical to the American doctrine,” while noting generally that “non-trivial differences” exist between the two countries’ application of the doctrine. Other scholars, when comparing the two bodies of contract law, have commented that the Chinese Contract Law requirement of the good faith performance standard “parallels the [Uniform Commercial Code’s] requirement of good faith.” This article seeks to add to the current scholarship on the doctrine of good faith in China and the US by examining the doctrine in both countries from both a theoretical and practical perspective. This article concludes that the doctrine of good faith in China is anything but “identical” to its counterpart in the US.

Keywords: doctrine of good faith, chinese contract law, US contract law