Good faith (Latin: bona fides; Indonesian: iktikad baik) is a general principle requiring honesty, fair dealing and reasonable regard for the legitimate interests of others in legal relationships.
Two Dimensions
Scholars distinguish subjective good faith, which concerns a person's honest state of mind (for example, a purchaser who did not know that the seller lacked title), from objective good faith, which is a standard of conduct measured against reasonableness and fairness.
In Contract Law
Civil law systems place good faith at the centre of contract law. Article 1338(3) of the Indonesian Civil Code requires agreements to be performed in good faith, and Indonesian courts increasingly apply the principle to pre-contractual negotiations as well. Good faith may supplement the express terms, restrict the exercise of contractual rights in an unreasonable way, and in exceptional cases justify adjusting a contract.
In English Law
English law has traditionally recognised no general duty of good faith in commercial contracts, preferring certainty. It does, however, imply duties of good faith into certain "relational" contracts, enforces express good faith clauses, and protects good faith purchasers in property law.
In Property and Public Law
The good faith purchaser of movable property is protected in many systems, including under Article 1977 of the Indonesian Civil Code. In public law, good faith underlies the protection of legitimate expectations, and in international law Article 26 of the Vienna Convention on the Law of Treaties requires treaties to be performed in good faith.