The Duty of Good Faith in Franchise Agreements in European Civil Law

The duty of good faith seeks to deliver a degree of equilibrium to the inherent tension within the franchise relationship between the desire of both parties to obtain the best commercial deal for themselves and a need to have a good ongoing commercial relationship based upon a modicum of mutual trust. It is currently a topic of considerable interest in the United States as a number of states consider enacting legislation imposing a duty of good faith. This is the first in a series of three articles that consider how the concept of good faith impacts upon franchising. This first is a two-part article that considers how it impacts franchising in the civil law jurisdictions of the European Union. The second will consider the current U.S. position. The third article will compare and contrast the U.S. and European approaches to good faith and seek to identify lessons for U.S. legislators to consider if they seek to legislate for a duty of good faith.