ANÁLISIS ESTADÍSTICO

1.3.2.2 The role of good faith  

The central role of good faith in the contract theory under the KCC is set out in Art. 193 concerning Contract Interpretation (construction), Art. 195 concerning the Content of the Contract (determination) and Art. 197 concerning Contract Performance (implementation).

i. Good faith as a rule of construction  

Good faith appears in the context of contract interpretation in Art. 193(2) and functions as a criterion to facilitate interpretation when the contract terms are unclear. Art. 193(2) provides that if there is room for interpretation of the contract, the court must seek to determine the common intention of the parties rather than adhering to the literal meanings of the words, taking into account the nature of dealing, current customs, and good faith and honourable dealing. Accordingly, the court will have to adopt a subjective interpretation where intention prevails over expression to ascertain the meaning of the contract words and the purpose of the agreement to reveal the contractual content through the use of, inter alia, good faith to see how a reasonable person would understand the terms. In addition, good faith could play a completive function. The courts may exercise their discretionary power and apply a "suppletive" interpretation to fill the gaps and create new obligations not initially included in the contract but that can be implicitly deduced from the nature of the contract, such as the transporter obligation of the safety of his passengers.¹⁴⁷

147 Ibrahim Abu Allail, p. 251. It is worthwhile mentioning that ambiguous unfair terms should always be   construed in favour of the adhering party in contracts of adhesion under the Kuwaiti Civil Code. The code here deviates from the general rule in contract interpretation in which ambiguous terms should be interpreted in favour of the debtor, see articles 194 and 82.

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ii. Good faith as a criterion for contract scope determination  

Good faith can play an important role in determining the scope of the contract and dictates certain obligations that are not included in the contract. Art. 195 states that determination of the subject matter of the contract shall not only be limited to the stipulations contained therein or the legal provisions governing the contract, but also what is deemed to be a requirement of the contract. To assess what can be a requirement of the contract, the code specifies four criteria that can be taken into account: (i) custom prevailing, (ii) rules of equity, (iii) nature of dealing, and (iv) good faith and fair dealing. Therefore, if the contract is a contract for construction, the contractor has to act in good faith and use the construction materials sparingly even if the contract does not expressly refer to this obligation. Good faith here plays a supplementary role, and extends the duties of the parties and obliges them to execute the contract in a loyal and co-operative way in order to bring the execution of the contract to a good end. The rationale behind the inclusion of these four criteria is that they allow the court to find and enforce implied obligations that were not initially included in the contract.¹⁴⁸

iii. Good faith as a rule of implementation  

 Art. 197 reads: "The contract must be performed in accordance with the stipulations contained therein and in a manner which is consistent with the requirement of good faith and honourable dealing". This article is important because it explains how each party should perform its contractual obligations and dictates that they have to execute their obligations as prescribed by the terms of the contract and in accordance with the principle of good faith. It reinforces the principle of pacta sunt servanda as declared by Art. 196 and imposes a moral obligation on the parties to act in good faith in accordance with

148 Compare, Egyptian Civil Code Art. 148.2 and the French Civil Code Art. 1135  

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reasonable standards of fair dealing. The text indicates that each party has to take into consideration the welfare of the other when executing his obligations, and maintain the trust and expectations arising out of the contractual relationship.¹⁴⁹ Therefore, if the contract is a contract of transport, then the transporter must perform his obligation in good faith, and take the shortest and safest route. Similarly, good faith entails that the creditor does not abuse his right to enforcement if an honest debtor is unable to fulfil his undertaking on time and award him an additional period for performance until an acceptable date in exceptional circumstances.¹⁵⁰ Good faith in this sense imposes a standard of behaviour that has to be maintained by the parties throughout the life of the contract.  

However, it should be noted that although the wording of Art. 197 confines the performance of obligations in good faith to the post-conclusion phase of the contract, it does not necessarily mean that acting in good faith is not required in the pre-contractual stage because lack of good faith (bad faith) is always wrongful behaviour and automatically gives rise to liability. The Commercial Circuit of the Court of Cassation¹⁵¹ in Kuwait held:

"The rule that provides that deceit (in the sense of acting in bad faith) invalidates all acts is a well-founded rule even if it has not been embodied in the code. This is because it is based on moral and social considerations aiming at fighting deception, fraud and any deviation from the requirement of good faith that must exist in all sorts of conduct for the benefit of individuals and society . . . and if the

149 Ibrahim Abu Allail, p. 293.  

150 Ibid., p. 294.

151 The Court of Cassation, which acts and is considered as a Supreme Court, is the third and final stage of litigation. However, this court acts as a supervisory body.

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trial court concludes that deceit exists, it is entitled to invalidate any act found to be contrary to the requirement of good faith".¹⁵²

1.3.2.3 The relation between good faith and unfair terms in the KCC  

It seems the reason behind the inclusion of the principle of good faith in the code is to moralize agreements, and to ensure that they fulfil a social function and not merely serve the needs of one party at the expense of the other. In addition, good faith can be seen as a judicial instrument that enables the courts to justify intervention to sanction dishonest conduct and to amend agreements according to their view. However, although it is theoretically conceivable that the principle of good faith as articulated in the code can be broadened to control all sorts of contractual unfairness, it is doubtful that it could play such a far-reaching role and be realistically applied to sanction unfair terms in consumer contracts. This is due to the fact that the notion of good faith in the KCC remains vague, which requires further development and concretization. In other jurisdictions such as Germany, France and Belgium, the courts have successfully given clarity to the notion of good faith, and cumulatively established rules and precedents relating to its meaning and function, particularly in Germany, over several decades.¹⁵³ It is unlikely that the same will be replicated in Kuwait as the courts view the law in terms of provisions and articles, and place less emphasis on general principles and abstract notions. Moreover, some scholars have noticed that the Kuwaiti courts have a strong inclination to apply the rules and interpret them in a strict manner.¹⁵⁴ Thus, this would suggest that they reject the notion of extending the application and interpretation of the principle of good faith in favour of the doctrine of sanctity of contract as articulated in Art. 196.

152 Cass. Comm. 95/1995.  

153 See the discussion in Martijn Hesselink (n 64).

154 Jamal Al-Nakkas, pp. 62-68.