Good faith and fair dealing in contracts formed and performed by electronic agents

Abstract

The development of electronic agents that increasingly play an active role in the contract formation and execution process has highlighted the need for the creation of law-abiding autonomous agent systems. The principle of good faith is an important guideline for contractual behaviour which permeates civil law systems. This paper examines how this principle is applied both during the negotiation of a contract and during its performance. Selected examples from civil law literature of precontractual duties of good faith, and of precontractual behaviour that is deemed to be contrary to good faith, are discussed. This is followed by a discussion of the extent to which such duties are recognised, or such behaviour proscribed, in common law jurisdictions. Some common standards for precontractual behaviour in civil and common law systems are identified. There is then a parallel analysis of the principle of good faith in contract performance with a view to identifying common traits or standards between civil and common law systems. These standards, in the situation where contracts are being negotiated and/or performed by or through electronic agents, would need to be reflected in the way such agents operate.