Also known as: good faith principle · good-faith principles · good faith · principle of good faith · bona fides
Written by attorneys · grounded in primary & secondary sources — see below
A legal principle requiring parties to proceed honestly and without intent to deceive or exploit. It demands reasonable inquiry and fair conduct before taking adverse action such as acceleration, dismissal, or compulsion of testimony. Courts and statutes invoke the principle to limit liability or deny relief when a party has relied on apparently valid information or has made a diligent effort to comply with legal requirements.
Gina Griffin missed two monthly payments on her home loan held by Guardian Insurance. The lender declared the full balance due and scheduled foreclosure. Because the mortgage contained an acceleration clause, the court examined whether the lender had exercised that right honestly after reviewing the payment history and giving notice. The good-faith principle barred acceleration when the lender had failed to confirm the default through reasonable inquiry.
Global Dynamics received a Rule 30(b)(6) notice listing five topics for examination. Its counsel contacted opposing counsel within days to discuss the scope and designate appropriate officers. The parties exchanged emails refining the matters and agreed on two witnesses. The good-faith principle was satisfied by the prompt conference and the designations that covered information reasonably available to the company.
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Shareholder Greta Goldstein filed a derivative action against Grandview Holdings alleging self-dealing by two directors. The board appointed a committee of qualified directors that reviewed documents and interviewed witnesses for six weeks. The committee concluded in a written report that continued litigation would harm the corporation. The good-faith principle supported dismissal because the determination followed a reasonable inquiry and was made without conflicts.
Attorney Gideon Graves advised client Gabriella Gomez about a proposed transaction whose legality was unsettled. He researched analogous statutes and case law, explained the risks, and outlined arguments that could support validity. The client decided to proceed after receiving this analysis. The good-faith principle permitted the advice because it constituted a diligent effort to determine the law rather than assistance in known criminal conduct.
A newspaper reporter received a grand jury subpoena seeking notes about a confidential source. The prosecutor showed that the investigation was ongoing and that the reporter's testimony was needed to identify participants in a public-corruption scheme. The good-faith principle required the reporter to appear because the investigation was legitimate and no constitutional privilege shielded the information.
Great Lakes Steel held a mortgage on Guadalupe Gallegos's residence. After default, the lender began nonjudicial foreclosure but skipped required pre-foreclosure notices and failed to verify the borrower's current contact information. The good-faith principle obligated the lender to follow every statutory step honestly throughout the process, exposing the foreclosure to challenge for procedural unfairness.
Good faith requires honest conduct and reasonable inquiry. Success is not required. A party satisfies the principle by making a diligent effort even if the ultimate goal is not achieved.
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Reliance satisfies the principle when officers act on information that appears accurate and the error is isolated clerical negligence rather than systemic or reckless misconduct. Suppression is then unwarranted because exclusion would not deter culpable police behavior.
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A partnership agreement may prescribe standards for measuring good faith if they are not manifestly unreasonable, but it cannot eliminate the underlying contractual obligation of good faith and fair dealing.
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The corporation must show that a qualified group made a determination in good faith after a reasonable inquiry that continuing the suit is not in the corporation's best interests. The plaintiff must then allege particularized facts showing the determination failed those requirements.
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…was not to be found guilty of the offense "unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother." A seemingly notable development in the English law was the case of Rex v. Bourne , [1939] 1 K. B. 687. This case apparently…