Objective Good Faith in Contracts: Concept and Practical Applications

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 a central principle of contract law in Brazilian civil law. It imposes duties of loyalty, cooperation, and disclosure on the contracting parties. Its practical application has direct consequences for how legal transactions are interpreted and performed.

What Objective Good Faith Means and How It Differs from Subjective Good Faith

Objective good faith, set out in Article 422 of the 2002 Civil Code, is a standard of ethical conduct that the parties must observe when they form and perform a contract. Subjective good faith refers to a psychological state of ignorance about defects or irregularities. Objective good faith is different: it is a rule of behavior, a duty to act honestly and loyally.

Article 422 requires contracting parties to observe the principles of probity and good faith, both when the contract is concluded and when it is performed. Legal scholarship and case law have extended this reach to include the pre-contractual phase (preliminary negotiations) and the post-contractual phase (obligations that survive after the relationship ends). This is what we call pre- and post-contractual liability.

Subjective good faith appears in provisions such as Article 1.201 of the Civil Code (possession in good faith) and Article 1.561 (putative marriage), which refer to a lack of knowledge of a particular factual or legal situation. Objective good faith, by contrast, works as a general clause that runs through all contractual relationships, regardless of the parties’ state of mind.

Functions of Objective Good Faith: Interpretive, Supplementary, and Limiting

Objective good faith performs three basic functions in contract law. The interpretive function (Article 113 of the Civil Code) requires that legal transactions be interpreted according to good faith and the customs of the place where they were made. When the meaning of a clause is in doubt, the interpretation most consistent with loyalty and mutual trust prevails.

The supplementary function creates what are known as ancillary or collateral duties, which exist even if the contract does not expressly provide for them. These include the duty of disclosure (communicating relevant circumstances), the duty of cooperation (not making it harder for the other party to perform), the duty of protection (not harming the other party’s person or property), and the duty of loyalty (not acting inconsistently or unfairly).

Objective good faith, set out in Article 422 of the 2002 Civil Code, is a standard of ethical conduct that the parties must observe when they form and perform a contract.

The limiting function restricts the exercise of individual rights when that exercise is abusive or contrary to the trust it has created. It shows up in doctrines such as venire contra factum proprium (the prohibition of contradictory behavior), supressio (loss of a right through prolonged failure to exercise it), surrectio (acquisition of a right through continued exercise), and tu quoque (the bar on demanding something the party itself failed to do).

Ancillary Duties and Their Practical Consequences

Breaching the ancillary duties that arise from objective good faith is what legal scholars call positive breach of contract. Even if the debtor performs the main obligation, violating a collateral duty can give rise to civil liability. A physician who performs the agreed surgery but fails to disclose relevant risks breaches the duty of disclosure and may be held liable for the harm that results from that omission.

In the pre-contractual phase, good faith requires confidentiality about information obtained during negotiations. It also prohibits walking away from talks without justification when the other party has already made investments in reliance on the deal being concluded. Abusively breaking off negotiations can give rise to compensation for material damages (lost profits) and even for moral damages, as case law has already recognized.

In the post-contractual phase, good faith requires, for example, that a former employer give accurate information about a worker to prospective employers, that the seller of a business not open a competing business in the same area, and that a service provider keep confidential any data obtained during the contractual relationship. Situations like these can lead to claims for compensation for moral damages.

Objective Good Faith in the Consumer Protection Code

The Consumer Protection Code (Law 8.078/1990) establishes objective good faith as a guiding principle of consumer relations. Article 4, item III, makes good faith the criterion for harmonizing the interests of consumers and suppliers. Article 51, item IV, declares void any contract clause that is incompatible with good faith and equity.

In consumer practice, objective good faith is the basis for prohibiting practices such as tying arrangements, misleading advertising, unilateral price changes, and abusive clauses in adhesion contracts. A supplier that violates objective good faith is liable both for the nullity of the abusive clause and for compensation for harm to the consumer.

Frequently Asked Questions

What does venire contra factum proprium mean in contracts?

Venire contra factum proprium is the prohibition of contradictory behavior that derives from objective good faith. It applies when one party acts in a way that is inconsistent with its earlier conduct, which had created legitimate trust in the other party. For example, a landlord who repeatedly accepts rent payments after the due date cannot charge a late-payment penalty without first giving notice, because the landlord created an expectation that late payment would be tolerated.

How do you prove a violation of objective good faith in court?

The burden of proving a violation of objective good faith falls on the party who alleges it, under Article 373, item I, of the 2015 Code of Civil Procedure (CPC/2015). That party must show that the other party’s conduct departed from the standard of loyal behavior expected under the specific circumstances. Documents, message exchanges, witness testimony, and expert evidence can all serve as proof. The judge assesses the conduct against the standard of the average person, taking into account market customs and practices.

Does objective good faith apply to contracts that have already ended?

Yes. Legal scholarship and case law recognize what is known as post-contractual liability (post pactum finitum), which imposes duties of conduct even after the contractual relationship has ended. A former contracting party must observe duties of confidentiality, of refraining from unfair competition, and of cooperation, depending on the circumstances. Breaching these duties gives rise to civil liability and can support a claim for compensation.

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