Yifat Naftali Ben Zion (Tel Aviv University – Buchmann Faculty of Law; Harvard Law School) has posted A Systems Theory of Good Faith (Theoretical Inquiries in Law) on SSRN. Here is the abstract:
Both the Uniform Commercial Code (UCC) and the Restatement (Second) of Contracts recognize the duty of good faith and fair dealing as a foundational principle of American contract law. Yet courts interpret this duty more narrowly than these texts suggest. Broader conceptions have met resistance, with some decisions warning that the “vaguely moralistic overtones” of good faith risk conflating contracts with fiduciary relationships or demanding unwarranted “equitable fairness.” In the scholarly literature, this narrow view is frequently defended in the name of contractual freedom, with the argument that displaying good faith is simply “to recognize the authority of the contract.” This Article challenges this narrow conception of the duty by drawing on systems theory, which highlights the complex interactions between legal relationships and doctrinal structures. It argues that this narrow perspective overlooks the connection between microlevel contractual interactions and macrolevel legal ordering, an essential link for designing a meaningful duty of good faith. Through a critical analysis of a case adopting a narrow view of the duty, the Article further advances a system-oriented account of good faith, conceiving it as a normatively grounded mechanism for promoting cooperation and curbing opportunism in contractual relationships. The systems theory perspective, attentive to both micro and macro dynamics, helps address concerns about judicial overreach and party autonomy, but without transforming contract law into fiduciary law. Reconceived in this way, good faith can better fulfill its normative and functional promise, fostering a contracting environment in which agreements can thrive.
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