A Legal Chameleon -- An Examination of the Good Faith Doctrine in Chinese and U.S. Contract Laws

Chunlin Leonhard, Loyola University Chicago

Abstract

When China promulgated its first comprehensive contract law a decade ago, it ostensibly adopted the good faith doctrine as a basic contract law principle. The Contract Law of the People’s Republic of China (“Chinese Contract Law”) requires that parties observe good faith as a general principle. The U.S. contract law has also generally recognized the good faith doctrine 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 the courts to use the doctrine to fill in gaps where necessary. Detractors on both sides of the Pacific criticize the doctrine for those very qualities which they believe have the potential to be abused by courts or parties. With the same criticisms and praises being levied at the doctrine known essentially by the same name in both countries , one U.S. legal scholar suggested that Chinese doctrine of good faith is “identical to the American doctrine,” while noting generally “non-trivial differences” between the two countries in the doctrine’s application. 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 good faith doctrine in China and the United States by examining the doctrine in both countries from both theoretical and practical perspectives. This article concludes that the good faith doctrine in China is anything but “identical” to its counterpart in the United States.