Good Faith in Contracts: The Invisible Principle Behind Every Agreement

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Objective good faith is no longer an abstract ideal. It is a practical rule of conduct that guides how every contract is interpreted and performed, requiring each party to act with loyalty, to share information, and to cooperate, and barring contradictory behavior that defeats the trust legitimately created in the other party.

Objective good faith as a rule of conduct in contracts

When two parties enter into a contract, the duties they take on do not end with what is written on paper. Alongside the obligations they expressly agreed to, there is a standard of behavior that both must meet: acting with loyalty, honesty, and respect for the other side’s legitimate interests. This standard is known as objective good faith (boa-fé objetiva).

Brazil’s Civil Code addresses the subject at several key points. Article 113 provides that legal transactions must be interpreted in accordance with good faith and the customs of the place where they were made. Article 422 requires contracting parties to observe good faith both when concluding and when performing the contract. These rules work as a compass for judges and for the parties themselves.

The word “objective” has a precise meaning. The inquiry does not look at each party’s inner intent, which belongs to subjective good faith. What is examined is outward conduct, measured against what we would expect of an honest, loyal person in the same situation. The relevant question is: does the behavior match what an honest contracting partner would do?

This shift in perspective has concrete consequences. Even if a clause formally authorizes certain conduct, exercising that right may be considered abusive if it violates the loyalty the law expects. Article 187 of the same Code classifies as an unlawful act the exercise of a right that manifestly exceeds the limits set by good faith, by accepted standards of conduct, or by the economic and social purpose of the right itself.

Ancillary duties: informing, cooperating, and protecting

Objective good faith does more than limit the exercise of rights. It also creates obligations that do not appear in the text of the contract, known as ancillary or collateral duties. These duties accompany the relationship from beginning to end, and they exist precisely so that the purpose of the contract is actually achieved, without harmful surprises for either party.

The first is the duty to inform. Each party must explain to the other the relevant aspects of the deal, especially those the other party could not discover on its own. Concealing a defect, a risk, or an essential condition can violate good faith, even if no clause expressly requires disclosure of that specific fact.

The second is the duty to cooperate. The parties must work together so that performance can be completed, and must avoid creating artificial obstacles or making it harder for the other side to fulfill its obligations. A party who, for its own convenience, prevents the other from performing, and then invokes that nonperformance in its own favor, acts disloyally and in a way the legal system does not tolerate.

The third is the duty of protection. It requires care for the other party’s person and property throughout the relationship. In consumer relationships, these duties receive additional statutory reinforcement: the Consumer Protection Code makes good faith a structural principle and demands transparency and balance between supplier and consumer at every stage of the transaction.

It is worth noting that ancillary duties outlast both the signing and the termination of the contract. Before the contract is made, during negotiations, mutual loyalty is already expected. After the relationship ends, duties remain, such as confidentiality about sensitive information and refraining from conduct that would hollow out the practical result of what was agreed. Once trust has been created, it generates lasting responsibilities.

When two parties enter into a contract, the duties they take on do not end with what is written on paper.

The rejection of contradictory behavior

One of the best-known expressions of objective good faith is the prohibition of contradictory behavior, traditionally identified by the Latin formula venire contra factum proprium. The idea is simple to state: no one may act in a certain way, lead the other party to legitimately expect that they will keep acting that way, and then behave in the opposite manner, harming the person who relied on them.

Imagine a creditor who, for years, accepts payments on dates and in forms different from those set out in the contract, without any reservation. If that creditor suddenly demands strict compliance and tries to penalize the debtor for a practice the creditor itself tolerated and encouraged, the claim may be barred. The consistent prior conduct created trust, and the abrupt reversal violates the loyalty the law requires.

Case law from Brazil’s higher courts has developed related doctrines to handle similar situations. Supressio describes the loss of a right that has gone unexercised for a significant period, to the point that the inaction led the other party to expect it would no longer be pursued. Surrectio, its counterpart, gives rise to a new legal position based on a practice that was repeated and accepted over time.

There is also tu quoque, which prevents a party who has breached the contract from demanding that the other side strictly comply with the very obligation the first party violated. All of these doctrines share the same root: protecting trust and punishing disloyalty. They show that a contract is not merely a text, but a living relationship governed by ethical standards of conduct.

Practical applications for businesses and individuals

For businesses, understanding objective good faith is a risk-management measure. Well-drafted contracts reduce disputes, but they do not remove the requirement of loyal behavior during performance. Practices such as unilaterally changing settled terms, hiding essential information, or making it harder for the other side to perform can create liability, even if a literal reading of the clauses seems to allow them.

The practical advice is to keep records of negotiations, put any changes in how the contract is performed in writing, and avoid informal tolerances that create expectations that are hard to reverse. If a company starts accepting a particular practice, it should do so knowingly, aware that over time the practice may harden into a standard the other side can demand.

For individuals, objective good faith is a tool of protection. Anyone who hires a service, buys a product, or signs a financing agreement is entitled to clear information, fair treatment, and the other party’s cooperation. Faced with surprising clauses, abusive charges, or sudden changes of attitude by someone who previously acted differently, the principle offers a solid legal basis for challenging the conduct.

In both cases, the guidance is the same: act consistently, transparently, and cooperatively. Good faith does not punish the legitimate defense of one’s interests, but it does prevent rights from being used as a trap against someone who relied on you. Documenting conduct, giving advance notice of changes, and staying consistent over time are habits that protect both the party offering and the party contracting.

Frequently Asked Questions

Does objective good faith apply even when the contract says nothing about it?

Yes. Objective good faith applies regardless of any contractual provision, because it comes directly from the law. The Civil Code imposes it on the interpretation, conclusion, and performance of contracts. Even if no clause mentions it, it forms part of the relationship and creates duties of loyalty, information, and cooperation that can be demanded of both parties throughout the life of the contract.

What does contradictory behavior prohibited by good faith mean?

It means a party cannot act in a certain way, lead the other party to legitimately expect that the behavior will continue, and then act in the opposite way to the detriment of the person who relied on it. This is the venire contra factum proprium formula. Consistency between successive acts is protected precisely to preserve the trust that supports the contractual relationship.

Can a valid clause be set aside based on objective good faith?

The exercise of a right granted by a clause can be limited when it becomes abusive. Article 187 of the Civil Code treats as unlawful the use of a right that exceeds the limits set by good faith, by accepted standards of conduct, or by the economic and social purpose of the contract. So even a formally valid clause does not authorize disloyal or contradictory conduct against a party who relied on the other side.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.