An analysis of the duty to negotiate in good faith : precontractual liability & preliminary agreement
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Good faith is one concept that defies a clear definition and courts have struggled to understand and establish its scope and ambit. This paper just seeks to analyze the scope of the duty of good faith as understood at the stage when actually no contract has been formed. Despite considerable support for the existence of a duty of good faith, courts in US have not been very receptive in recognizing the duty of good faith especially in the precontractual stage, especially when parties enter into preliminary agreement. Courts have relied on the a number of factors to determine the enforceability of such preliminary agreement. However it has been argued in this paper that Courts should do away with this fact specific inquiry and adopt a bright line rule. This would help promote uniformity and predictability in judicial decisions and also clarify the scope of duty of good faith.