This paper argues that good faith cannot be defined and furthermore that there is no need to define good faith as it takes on meaning when applied to facts. Hence an explanation or application of good faith is defined by its function namely to enforce the expected performance of both parties. It is further argued that the function of good faith will determine which fact pattern has to be found by a court in order to determine the expected performance of the contractual parties. It follows that good faith is the legal concept which allows courts to do justice and do it according to law. As good faith takes on meaning only when applied to contractual terms, Peden is correct to argue that “. . . the widespread use of ‘good faith’ in legislation is . . . completely unhelpful in the development of contractual good faith.”

An interesting way to juxtaposition this point transnationally is to look at international and US theories of good faith in the light of the development of good faith in a jurisdiction which has struck a civil law/common law compromise about the use of the concept. Australia presents itself as a fledgling nation in the development of good faith, while simultaneously being a CISG state subject to the good faith of Art. 7. The paper will therefore examine the following:

The theoretical base on which a definition or explanation of the function of good faith is based is very divergent and will be discussed in part one. The conclusion which can be drawn from part one will be applied in part two to the most important available judicial decisions in determining whether there is consistency in the application of the concept. Part three will discuss whether the CISG and the domestic interpretative methods will influence the applications of good faith.