Good Faith in Jersey Contracts: the importance of Pothier.
Pothier, an 18th Century jurist, is often cited as the “surer guide” to Jersey contract law and we sometimes forget that Pothier’s influence upon the development of English contract law, particularly in the 19th Century, was also immense.
English law can of course provide very useful material for Jersey lawyers when we seek to develop our own legal principle. In articles on this website, or published elsewhere, I have sometimes advocated areas where Jersey law might follow English legal developments, for instance, where Jersey contract law is uncertain or cumbersome in a modern commercial setting. However, in the context of whether or not good faith is a contractual duty, Pothier is such a fertile source that one wonders why more use of his writings has not been made. I don’t regard such a comment as “cherry-picking” but rather making the best use of the tools that are available, and Pothier is particularly authoritative when it comes to Jersey’s contract law.
The recent case of Hard Rock Ltd v HRCKY Ltd  JRC026 was only an interlocutory decision as to whether or not an arguable case was made out on the particular pleadings/facts for a breach of an implied duty of good faith, and the claim was struck out. The Royal Court referring to earlier Jersey and English authority opined that such a term might be capable of being implied into Jersey contracts on a basis wider than merely insurance contracts, but the point remains open.
In researching and providing initial instructions for the creation of what became the Supply of Goods & Services (Jersey) Law 2009, I had to carry out a detailed analysis of Pothier as well as the then applicable English statutory framework to such contracts. It became apparent that English law did not impose any duty in respect of “satisfactory quality” of goods sold in a private capacity, but only upon business sellers. Pothier, however, was absolutely clear that a duty applied to all vendors. Indeed, he frequently spoke of good faith applying to contracts of sale in his Traité Du Contrat De Vente. Even a cursory look through the headings to his chapters conveys how “la bonne foi” gives rise to a multiplicity of obligations.
When presented with the varying approaches, the relevant committee of the States followed the English duty on business sellers but also wanted to reflect Pothier’s wider duty on private vendors. The committee followed Pothier’s duty of good faith and decided to opt for what became article 24 of the 2009 Law. Unlike the English position, this placed a duty on vendors who were not acting in the course of a business, to disclose defects of which they were aware, if such defects would also mean that the goods were not of “satisfactory quality.” This was considered to reflect Pothier’s duty of good faith.
(1) If the seller sells goods under a contract of sale of goods otherwise than in the course of a business, the seller warrants that the seller has disclosed to the buyer all defects in the goods that render the goods not of satisfactory quality, being defects of which the seller is aware.
(2) Paragraph (1) applies only to the extent that, if Article 23(3) applied to the contract of sale of goods and the defects were present in the goods, there would be a breach of the warranty referred to in Article 23(3).
It is very likely that a large proportion of the Jersey public are not actually appreciative of this more exacting duty when selling things in a private capacity. However, it is an example where Pothier has shown the way, and how his writings might still be helpful in the wider context of good faith in contractual relations. I should add, it is pleasing that the States opted for a law that expected higher standards than would apply in the Uk & demonstrates the importance of the legislature getting stuck in, rather than one having to wait for the Courts to nudge things along every now and then.
Of course, there are also many other writers that might be consulted when the issue of good faith next comes before the Royal Court, Domat being another that speaks on the subject. Wider afield, are “The Principles of European Contract Law” (PECL) or the US “Uniform Commercial Code” (UCC), both of which are underpinned by the concept of “good faith” in contracts and merit consideration when considering the path forwards.