Mental Perception of Good Faith in Doing Business in Russia and Abroad

Historical roots and codification. In Russia, the principle of good faith was explicitly закреплен at the level of the Civil Code of the Russian Federation relatively recently (Articles 1 and 10 of the Civil Code), although its elements had existed earlier. At the same time, it immediately became one of the key principles of civil regulation. In continental European countries (for example, France), a similar institution has existed much longer — since the reception of Roman law (bona fides). In the French Civil Code, this principle also occupies a central place.

Role in the legal system. In Russian doctrine, good faith is viewed not merely as a person’s subjective honesty, but also as an objective standard of conduct: “no one should have the right to use their unlawful or unfair behavior in their own interests.” This means that the actions of market participants must be not only formally lawful, but also fair in substance. In foreign systems, the approach varies:

Continental law: Good faith often acts as an open norm (“standard”), the content of which is determined by a judge based on the circumstances of a particular case. It serves as a tool for filling gaps in a contract (supplementary interpretation), protecting the parties’ expectations, and preventing abuse. Here it is closely connected with the concept of equity (fairness).

Common law (England, USA): The concept is less formalized and is not always set out in a single code. English law operates with the categories of “honesty” and implied contractual terms, and the role of good faith more often manifests itself through case law in contract interpretation and protection against bad faith conduct. For an English lawyer, the terminology may seem confusing, as there is no single unified definition.

Subjective and objective aspects. In Russian practice, the concept includes two aspects:

• Subjective: the mental state of a person, their lack of awareness of circumstances that would have led an honest person to refrain from entering into a transaction. For example, a good faith purchaser of property is one who acquired an item lawfully and was unaware of third-party rights.
• Objective: the obligation to act honestly and fairly, even in the absence of intent to violate the rights of others. This aspect is actively applied in tax relations and antitrust regulation.

Consequences of bad faith. Differences are also evident in the consequences. In Russia, the liability of a good faith possessor (for example, in the recovery of property by its owner) is significantly more lenient than that of a bad faith possessor. A good faith possessor is liable for deterioration of the property only from the moment they became aware of the true owner’s rights.

Application by courts. In many European countries, courts use the principle of good faith as a means of introducing constitutional values into private law and as a tool for flexible response to unforeseen circumstances (the doctrine of hardship in contract performance). In Russia, courts are also increasingly relying on this principle to adjust the parties’ rights where their exercise contradicts the spirit of the law.

Thus, the key difference lies in the degree of formalization and the role of the principle: in Russia, it is a fundamental yet relatively young legal standard, whereas in Europe and Anglo-Saxon countries it has evolved over centuries, functioning more as a flexible judicial instrument and a moral filter for private law.

Author: Valery Valeryevich Smirnov, PhD in Economics, Associate Professor of the Department of World Economy and World Finance, Financial University under the Government of the Russian Federation.