The history of photography is an epic journey filled with significant effects on human civilization, and the end goal has always been to be able to capture moments as they happen. Many things have changed regarding the visual representation of events, and this goes as far as the age of the cave dwellers who engraved crude but quite comprehensive drawings on the walls of their caves. This continued even in medieval times when the painting was becoming more advanced and helpful in representing information and objects for future reference (Aiello & VanLeeuwen, 2023). Egyptians used symbols, typically drawings, to communicate (Aiello & VanLeeuwen, 2023). Fast forward to the camera age, visual representation reached a new milestone, and even though exposure took a long back then, it was shorter than sitting for a portrait painting, even from the best painters (Aiello & VanLeeuwen, 2023). Even as the film cameras improved, switching from conventional analogue photography to digital photography was the most significant milestone. Digital cameras revolutionized the photographic industry and have given rise to new societal norms that have overall changed how we perceive photographs by increasing the versatility of their use and context to include emotions while also making photography accessible to people all over the world through smartphones and social media.
The invention of the digital camera came as a big revolution in the technology sector, but it took quite some time for people to appreciate its significance. The image receiver is the first technological innovation distinguishing a digital camera from a traditional analogue camera. In contrast, an analogue camera uses a photosensitive film that is exposed to light and the image is engraved (Pohanka, 2020). On the other hand, digital cameras have a photosensitive sensor with several cells called pixels that record the amount and type of light falling on specific regions (Lukac, 2018). The first digital cameras lacked recognition because they produced low-resolution photos with the first digital camera that used a charge-coupled device (CCD) developed by Willard S. Boyle and George E. Smith in 1969 with a resolution of 0.01 megapixels (Lukac, 2018). The second revolution in digital cameras came with the advancement in CCD and complementary metal-oxide-semiconductor (CMOS) sensor technology, allowing higher resolution (Lukac, 2018). This technology was then paired with digital storage devices and a screen for the viewfinder, and thus came the birth of digital photography.
Due to the popularity of digital cameras, especially in the 21st century, the reachability and accessibility of this technology have seen its rise in these times, which has similarly had its impacts on modern culture. In the past, photography was only done by professionals in the field because the cameras were either too bulky to carry around or too expensive to venture into as a hobbyist (Pohanka, 2020). The digital cameras began as expensive in their early development stages and were even rare as they were used in more technical places such as labs, but as the technology advanced, the consumer-based version was very cheap (Pohanka, 2020). Body materials were made from plastic which reduces manufacturing costs drastically, and thus they were sold so cheaply that the ordinary consumer could afford them (Fang et al., 2020). It was only after integrating digital cameras into mobile phones that the technology gained popularity and reached the world’s reach (Otero et al., 2019). People from all parts of the world now had a camera in their hands, and taking pictures as a hobby could now take its course.
The vast reach of digital cameras into most people’s hands has changed what we consume in terms of visual content and has also increased the capture of moments that are unique or even accidental (Iqbal, 2021). People have changed in culture regarding their actions in specific settings or situations. For instance, seeing people enter a restaurant has now become a norm. The first thing they do is take out their phone to take a picture in a situation where a conflict has broken out in public, and it is normal to see people take out their digital camera phones to record the events (Iqbal, 2021). People are documenting their lives more due to the accessibility of digital cameras, and due to sharing these photos through social media platforms and the internet in general, a vast collection of images can be found online (Fang et al., 2020). People are becoming journalists because they document certain events that journalists would otherwise document, and the information going to social media platforms is changing people’s consumerism of news from television (Bell, 2019). However, this has its drawbacks because people would instead record occurrences such as a person getting buttered or drowning instead of helping (Bell, 2019).
To top it all off, digital cameras also made people better photographers and the advancement inspired other technologies that made photography better in general. In the age of photo films and plates, photography was only done by a professional who only required a few shots to produce the desired outcome. Today, people can take as many as 100 photographs to select the best five to keep and commemorate (Bell, 2019). In addition, digital cameras come with many automated features such as auto exposure, autofocus, aperture correction and shutter speed, which allow the taking of many pictures in a short period to capture perfect pictures even if the subject blinked (Otero et al., 2019). Due to the digital format of photographs in digital cameras, photo editing software has extensively been developed, and with these skills, one could make a masterpiece from a relatively stock photo in a few clicks (Nesemann et al., 2020). The software integration in some cameras, especially those smartphones, has seen technical improvement in photo quality even with small resolutions such as 12 megapixels in the iPhone (Nesemann et al., 2020).
Photographic Analysis
(Photo by Roman Odintsov: https://images.pexels.com/photos/4552130/pexels-photo-4552130.jpeg?auto=compress&cs=tinysrgb&w=1260&h=750&dpr=1)
This photo by Roman Odintsov shows a person in front of well-served dishes and cuisines blurred in the background. The main focus is the smartphone the subject is taking pictures with, and the quality of the smartphone’s viewfinder is just as good as other cameras. This photo infers that people are now changing their habits in subjects such as eating, whereby if a person prepares a good dish or is in a restaurant and is served a lovely meal, they instinctively take out their smartphone to use the digital camera on it. The photo also shows how simple photography has become because the subject is on the brink of pressing the capture button without adjusting much. After all, it is automatically done for them using software features.
(Photo by Nam Quân Nguyễn: https://www.pexels.com/photo/silhouette-of-a-man-on-a-photo-of-a-woman-smiling-on-a-bridge-16138163/)
This photograph by Nam Quân Nguyễn shows a young woman standing behind a water barrier with a city and a large water mass on the horizon while he looks at the camera. The photograph also depicts another image of a young man facing the horizon and seeming to look at the sunset from a distance. One can infer that photo editing software has been used to creatively and seamlessly blend two images to form this relatively simple scenic photograph. This shows how digital photography has added more power to the photographer’s hands since they can take a reasonably simple photograph and edit it to create a masterpiece.
(Photo by Rahul Pandit: https://www.pexels.com/photo/unrecognizable-spectators-recording-video-of-live-concert-on-smartphones-5179915/ )
This photo by Rahul Pandit shows a crowd in what seems to be a live night concert with some smoke and flashy lights in the direction they are facing. Several people are seen holding up their mobile phones, pointing the back of the phones to the action. This photo depicts the vast reach of digital cameras on people’s hands and how people use them to document their lives and capture exciting moments. The latter is enabled because digital cameras are compact and thus enable smartphone manufacturers to incorporate them in every phone produced today.
References
Aiello, G., & VanLeeuwen, T. (2023). Michel Pastoureau and the history of visual communication. Visual Communication, 22(1), 27-45.
Bell, B. T. (2019). “You take fifty photos, delete forty-nine and use one”: A qualitative study of adolescent image-sharing practices on social media. International Journal of Child-Computer Interaction, pp. 20, 64–71.
Fang, Y., Zhu, H., Zeng, Y., Ma, K., & Wang, Z. (2020). Perceptual quality assessment of smartphone photography. In Proceedings of the IEEE/CVF Conference on Computer Vision and Pattern Recognition (pp. 3677-3686).
Iqbal, U. (2021). Smartphone fundus photography: a narrative review. International Journal of Retina and Vitreous, 7(1), 44.
Lukac, R. (Ed.). (2018). Single-sensor imaging: methods and applications for digital cameras. CRC Press.
Neumann, J. M., Seider, M. I., Snyder, B. M., Maamari, R. N., Fletcher, D. A., Haile, B. A., … & Keenan, J. D. (2020). Comparison of smartphone photography, single-lens reflex photography, and field-grading for trachoma. The American Journal of tropical medicine and Hygiene, 103(6), 2488.
Otero, C., García-Porta, N., Tabernero, J., & Pardhan, S. (2019). Comparison of different smartphone cameras to evaluate conjunctival hyperaemia in normal subjects. Scientific reports, 9(1), 1339.
Pohanka, M. (2020). Colourimetric hand-held sensors and biosensors with a small digital camera as signal recorder, a review. Reviews in Analytical Chemistry, 39(1), 20–30.
Tesco Global Expasion University Essay Example
Introduction
Tesco, one of the largest retailers in the world and the top retailer in the UK, recorded yearly revenue of more than $84—12 billion after the 2022 fiscal year (Tesco,2022). With subsidiaries in 12 countries around Asia and Europe and more than 450,000 employees worldwide, the corporation has a significant global footprint. The business began as a modest food store in London in 1919 and has since expanded to become a significant player in the world’s retail market (Tesco, 2022). Tesco’s primary line of business is food retailing, but it has expanded into other sectors like financial services and digital goods. Tesco has made entering foreign markets a vital component of its growth (Phan, 2021). This report will carry out a complete strategic analysis and evaluation of Tesco’s current strategic position in the grocery and retail industry and critically evaluate the international strategies the company can adopt in international markets. This report will also analyze the different modes of entering international markets that Tesco could consider. Finally, the report will summarize the essential findings and recommendations for Tesco’s international expansion strategy.
Strategy Application
Company Overview
Tesco is a large international retailer and is the most appreciated brand nationally and internationally (Tesco, 2022). The company’s mission is to be the most highly regarded firm by offering its clients high-quality goods and services, and its objective is to dominate the retail sector. Tesco aims to satisfy its consumers with high-quality, reasonably priced goods and services while simultaneously delivering profit to its stockholders and positively impacting the neighbourhoods where it does business (Phan, 2021). The business strives to be a responsible corporate citizen by encouraging sustainability, minimizing its environmental impact, and giving its workers a fantastic workplace. Tesco’s overall goal is continually improving and innovating to meet its customers’ and stakeholders’ changing needs and expectations.
Internal Analysis
Tesco’s strategy in the UK can be analysed by using the SWOT framework. This framework is beneficial in internal analysis as it provides a systematic and structured approach to identifying a company’s internal strengths and weaknesses and external opportunities and threats. This helps develop strategies that capitalize on strengths, address weaknesses, leverage opportunities, and mitigate threats to achieve organizational goals.
Strengths
Tesco is one of the most reputable and trustworthy brands in the UK, giving it a competitive advantage because of its great brand recognition. Tesco sets itself apart from rivals by providing a broad selection of goods, including food, apparel, gadgets, and financial services, to a wide spectrum of clients (Tesco, 2022). Tesco can attain economies of scale thanks to its comprehensive business activities, which leads to cost savings and appealing pricing for customers. The organization’s well-established and effective supply chain guarantees prompt replenishment of fresh goods, upholding high levels of client satisfaction. Tesco has also made significant investments in its mobile app and digital capabilities, enabling customers to order things and pick them up in-store or deliver them right to their homes, increasing convenience (Soegoto, 2021).
Weaknesses
Due to increased competition and changing consumer preferences, Tesco’s profitability has declined in recent years. Additionally, Tesco is heavily dependent on the UK market for its revenue, which makes it vulnerable to economic downturns or changes in consumer behaviour in the UK. It has also suffered from the poor international expansion: Tesco’s international expansion strategy has not been successful in all markets, particularly in the US and Japan. According to Van Hest(2022), Tesco has been criticized for lack of innovation in its product offerings and in-store experience. Tesco has faced criticism for its treatment of employees, including low wages and poor working conditions. These weaknesses can impact its brand image and limit its productivity.
Opportunities
Tesco has the opportunity to expand into new international markets, particularly in Asia and Africa, with growing demand for groceries and retail. Furthermore, for example, Tesco could diversify its product offerings further by expanding into new categories such as health and wellness or sustainable products (Tesco, 2017). For example, the company is trying to introduce private labels that guarantee customers high-quality products at affordable prices. Tesco has significant potential to expand its online and digital capabilities, including offering home delivery and integrating digital and physical shopping experiences (Kar et al., 2021). Tesco can improve its sustainability credentials by investing in renewable energy and reducing its environmental impact. Tesco can take advantage of changing consumer preferences, such as the growing demand for healthier and more sustainable products (Katsikeas et al., 2020).
Threats
Tesco faces intense competition from other grocery and retail chains and new entrants in the market. For example, companies like Sainsbury and Aldi are rapidly increasing their market share (Zhao & Dou, 2019). Additionally, economic uncertainty and fluctuations can affect consumer behaviour and spending, impacting Tesco’s revenue and profitability (Soegoto, 2021). Changing consumer preferences and shopping habits, including shifting to online shopping, can impact Tesco’s in-store sales and footfall. Regulation changes, such as minimum wage or taxation, can impact Tesco’s cost structure and profitability. Brexit has created uncertainty and potential disruption in the supply chain and could affect Tesco’s ability to source products and maintain competitive prices (Benito et al., 2022).
RBV framework
Additionally, Tesco’s internal analysis can be analysed by the RBV framework. The table below illustrates the company’s internal resources and how they contribute to its competitive advantage.
EXTERNAL ANALYSIS.
The external environment can significantly impact the operation of any company. The PESTLE framework is essential in external analysis as it helps identify and analyze the external factors that impact a company’s operations and performance. This analysis can help companies adapt to changes and opportunities in the market, mitigate risks, and develop strategies to remain competitive.
PESTLE
The table below represents the PESTLE analysis for Tesco in the UK market.
| Factor | Impact |
| Political | · Brexit and its impact on trade and the labor market
· Increased regulations on food safety and labelling
· Minimum wage legislation affecting staffing costs
(Soegoto, 2021) |
| Economic | 1. Inflation in the UK is impacting consumer spending power
2. Changes in exchange rates affecting imported goods
3. Economic recession affecting demand for premium products
(Jones & Comfort, 2019) |
| Sociocultural | 1. Shifts in consumer preferences and trends (Jones & Comfort, 2019)
2. Increasing health and wellness awareness leads to demand for organic and healthier products
3. Aging population leading to demand for specialized products and services |
| Technological | – Increasing adoption of e-commerce and online shopping
– Advancements in automation and robotics affecting the supply chain and operations (Zhao & Dou, 2019)
– Adoption of AI and big data analytics to improve customer experience and optimize operations (Benito et al., 2022) |
| Legal | – Changes in employment law and regulations
– Increasing regulation of e-commerce and data privacy
– Health and safety regulations impacting operations |
| Environmental | – Increasing demand for sustainable and eco-friendly products
– Regulations on carbon emissions and waste management
– Impact of climate change on food production and supply chain (Van Hest, 2022) |
Porter’s five forces
It is also imperative to analyse the competitive landscape when analysing Tesco’s external environment. The most appropriate framework for this task is Porter’s five forces since it evaluates the forces that are influential in competitive advantages.
The threat of new entrants
The threat of new entrants in the UK is high due to several factors, including economies of scale, capital requirements, supply or distribution channel access, experience curve, expected retaliation, legislation, and differentiation. Economies of scale make it difficult for new entrants to compete on price and match operational efficiency (Pedersen & Tallman, 2022). The capital requirements of entry are significant, making it challenging for new entrants to obtain funding. Access to supply or distribution channels is critical and established players like Tesco have long-standing relationships with suppliers and established distribution networks (Pedersen & Tallman, 2022). Tesco’s experience curve represents a competitive advantage, allowing them to operate more efficiently than new entrants. Existing players like Tesco have strong brand recognition, customer loyalty, and a robust supply chain that new entrants may struggle to match, giving Tesco a competitive advantage (Asmussen & Foss, 2022).
Bargaining power of suppliers
The bargaining power of suppliers in the UK retail industry is relatively low, as there are many suppliers. Tesco has strong negotiating power due to its large scale of operations. Additionally, the switching costs are low, making it easy for Tesco to switch to another competitor the threat of forward integration is also low, making the suppliers less powerful (Benito et al., 2022). However, suppliers can still exercise some bargaining power if they offer unique or high-quality products. Tesco has built lasting ties with many of its suppliers, which has enabled the business to negotiate better pricing and guarantee a steady supply of goods (Jones & Comfort, 2019). With its fields and production facilities, the company has also invested in vertical integration to lessen its dependency on other suppliers (Van Hest, 2022).
Bargaining power of buyers
The bargaining power of buyers in the UK retail industry is high, as customers have many options to choose from and can easily switch to competitors. The switching cost is also low, and the suppliers of the product offer are not differentiated too much (Zhao & Dou, 2019). thus, to combat this high bargaining power, Tesco has a solid customer base, with a loyalty program and personalized offers that incentivize customers to shop at its stores (Jones & Comfort, 2019). The company has also invested in its online and mobile channels, enabling it to reach a wider audience and provide a convenient shopping experience. These initiatives help the company differentiate from competitors to maintain customers (Pedersen & Tallman, 2022).
The threat of substitute products
Given how simple it is for customers to move to other items or channels, the threat of substitute products to the UK retail business is high. Traditional shops like Sainsbury’s and Morrisons and internet merchants like Amazon and Ocado compete with Tesco. In response, the business has increased spending on its mobile and web platforms and its range of premium and organic items.
The intensity of competitive rivalry
In the UK retail sector, companies compete fiercely with one another. First, the business has a balanced distribution of competitors, with Tesco competing for market share alongside big names like Sainsbury’s, Asda, and Morrisons (Wood, 2020). This equilibrium means that even slight changes in market share can put the companies in the business under much competition. Second, there hasn’t been much room for new market entrants because of the industry’s current modest growth rate. Secondly, businesses must generate large amounts of revenue to break even because the retail sector has significant fixed expenditures like rent, labour, and marketing. Since businesses fight for customers and money, this scenario increases competitive pressure (Katsikeas et al., 2020). Fourthly, a fierce competition is also fuelled by the industry’s high exit barriers.
Last, a lack of differentiation in the retail sector might exacerbate the competitive strain. Businesses provide comparable goods and services; therefore, buyers might not have a compelling reason to pick one over the other (Van Hest, 2022). As a result, there is fierce competition among businesses as they compete on price, marketing, and other aspects to draw in clients. Tesco uses its robust brand recognition and economies of scale to negotiate better rates with suppliers and offers customers competitive prices to mitigate this. Also, the business is constantly developing new technological solutions to increase productivity and guarantee cost savings in warehouse operations. The company has maintained low prices in this fashion, which gives it a competitive advantage.
Global Strategies
Business strategy
Porter (2008) proposed four generic strategies companies can adopt when competing in a specific market. These strategies are cost leadership, differentiation, and a focus strategy. In this situation, Tesco chooses to compete in new foreign markets by combining a differentiation strategy with a cost leadership approach. This indicates that the business tries to stand out from the competition by providing high-quality goods cheaper than its target market. This hybrid approach provides strategic benefits that aid the organization in gaining market share in global marketplaces (Krishnan et al., 2023). As a result, Tesco benefits from a broader client base and a competitive advantage over its rivals. Thus, Tesco can outperform rivals in sales volume, which may result in economies of scale and lower prices. This, in turn, can lead to higher profits and reinvestment in areas of differentiation, such as technology, supply chain management, and customer experience.
However, there are also some potential downsides to a hybrid strategy. For example, balancing low prices with enhanced benefits can be challenging and require significant investments in supply chain management, marketing, and technology (Wheelen et al., 2019, p.230). This can result in increased costs that may erode margins and impact profitability. Furthermore, if Tesco’s rivals can match or exceed its offering, Tesco may lose its competitive advantage and struggle to maintain market share.
Corporate strategy
The strategy at the corporate level focuses on the general direction and extent of an organization and how it will create value for its various business units. Tesco’s corporate-level strategy can be evaluated using Ansoff’s Matrix (Hussain et al., 2013). Tesco’s corporate-level strategy is focused on diversification, expanding into new markets and product categories. The company has diversified its offerings beyond traditional grocery retailing, including financial services, telecoms, and healthcare (Asmussen & Foss, 2022). The upsides of this strategy include the ability to leverage existing assets and expertise, as well as the potential for growth and increased revenue streams.
Additionally, diversification can help to mitigate risk and reduce dependence on a single market or product. However, there are also downsides to this strategy (Hopkin, 2017). Diversification can be expensive and resource-intensive, requiring significant investment in new markets and product development (Galpin, 2019). Additionally, Tesco may face challenges in managing and integrating diverse business units and may struggle to maintain focus on core competencies (Krishnan et al., 2023).
Global strategy
Wheelen et al. (2019) suggest four main international strategies: simple export, multidomestic, complex export, and global strategy. Simple export involves focusing on manufacturing in one country and exporting products with minimal coordination of marketing efforts overseas. Multidomestic involves producing goods and services locally and treating each market independently (Krishnan et al., 2023). Complex export builds on coordinated marketing efforts while locating most activities in a single country. Global is the most mature international strategy, with highly coordinated activities dispersed worldwide (Wheelen et al., 2019).
Based on the analysis above, Tesco adopts a multi-domestic strategy in its global operations. This approach allows Tesco to tailor its products and services to the local market, making it more appealing to customers and increasing its market (Van Hest, 2022). Tesco can take advantage of local knowledge and expertise, which can help it to avoid mistakes and make better decisions in each market. The result is increased brand loyalty in each market, as customers perceive Tesco more in tune with their needs and preferences (Asmussen & Foss, 2022). This strategy helps to reduce risk and uncertainty in each market by adapting to local needs, regulations, and cultural differences. However, the strategy can lead to higher costs due to the need to adapt to local markets and comply with local regulations. This can reduce the economies of scale that Tesco might achieve with a more standardized approach (Puck & Filatotchev, 2020). Managing and coordinating activities across multiple markets can be challenging, as each market has unique needs and requirements. This can result in duplication of effort and inefficiencies.
Entry Strategies in International Markets
Joint Venture
Tesco has joint ventures with regional businesses to increase its presence in new markets. For instance, Tesco and China Resources Enterprise collaborated to open stores in China under the “Tesco China” brand. Sharing resources, local expertise, and risks are a few benefits of this strategy (Grøgaard et al., 2019). The drawback is that Tesco might have less influence over the business.
Acquisition
Tesco has also acquired local companies in some markets to expand its presence. For instance, Tesco bought the UK’s One Stop chain of convenience stores. Having a well-established brand, client base, and supply chain are benefits of this strategy. The drawback is that integrating the purchased company into Tesco’s operations might be expensive and require substantial expenditure.
Greenfield Investment
Tesco has also ventured into fresh markets by building new stores from the ground up. By adopting this tactic, Tesco can exercise complete control over its operations, encompassing store layout, design, and supply chain (Krummel, 2022). This approach offers several advantages, such as establishing a new customer base and ensuring absolute authority over the business (Puck & Filatotchev, 2020). However, constructing new stores and the associated infrastructure can be costly and time-consuming, a significant drawback.
Franchising
Tesco has also increased its global reach through franchising. Under this strategy, local business owners can utilize the Tesco name and operating system in exchange for fees and royalties (Krummel, 2022). Low investment costs and quick expansion are benefits of this strategy. The drawback is that Tesco could not have as much control over the operations and store quality (Grøgaard et al., 2019).
Licensing
Licensing is an entry mode that allows companies like Tesco to grant foreign companies the right to use their intellectual property or technology for a fee or royalty (Kar et al., 2021). The advantages of licensing currently include low investment and risk, access to local expertise, and additional revenue streams. However, licensing also has disadvantages, such as limited control over the licensee’s operations, limited returns compared to other entry modes, and the potential loss of intellectual property. Tesco is considering licensing as an entry strategy when expanding into new markets, especially when they want to minimize investment and risk while accessing local expertise and generating additional revenue (Kar et al., 2021).
Recommendations
This analysis shows that Tesco should maintain its hybrid strategy in its global markets. To increase its competitiveness in international markets, Tesco should implement several approaches to make its strategy successful. Customization is essential, and the company should tailor its products and services to meet the unique needs of each market. Innovation is another critical strategy, and Tesco should invest in research and development to continually improve its offerings (Katsikeas et al., 2020). Strategic partnerships with local companies can also be beneficial, providing Tesco with access to distribution networks, local market insights, and brand awareness. An efficient supply chain is essential, and Tesco should work on building a system that delivers products quickly and at a low cost (Rosnizam et al., 2020). Finally, Tesco should invest in e-commerce platforms to expand its reach and make its products and services more accessible to customers. By implementing these strategies, Tesco can stay ahead of the competition, provide customers with unique offerings, and continue to grow its global presence (Katsikeas et al., 2020).
Conclusion
This report has provided an overview of international expansion strategies, focusing on Tesco as a case study. The report has applied strategic models to evaluate the company’s internal and external environment. Tesco adopts a hybrid business-level strategy, corporate diversification, and multidomestic global strategy. The report discussed the various modes of entry that Tesco has used in its international expansion and reviewed its benefits and drawbacks. Additionally, based on the analysis, strategies to increase Tesco’s competitiveness in international markets were recommended. These strategies include customization, innovation, strategic partnerships, efficient supply chain, and e-commerce. Tesco can enhance its global presence, increase brand recognition, and effectively compete with local competitors in different international markets by implementing the recommended strategies.
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Wheelen, T.L., Hunger, J.D., Hoffman, A., N. & Bamford, C.N. (2019). Concepts in Strategic Management and Business Policy: Globalization, Innovation and Sustainability plus Pearson MyLab Management with Pearson eText, Global Edition, 15/E, Pearson. http://students.aiu.edu/submissions/profiles/resources/onlineBook/M6Z2W9_Strategic_Management_and_Business_Policy_Globalization-_Innovation_and_Sustainabilityuse.pdf
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The Meaning Of The Good Faith Principle University Essay Example
Abstract
The definition of good faith, which is difficult to define since it is vague, is covered in this paper before giving a thorough summary of the idea. The next section of the essay summarizes Good Faith throughout history, noting how its meaning has changed through time. The problematic facets of the idea of “Good Faith” are discussed in the third section of the essay. This section examines how the difference between objective and subjective notions of trust, which poses a challenge in any society, is problematic for various legal systems.
Similarly, the fourth part of the study examines the applicability of Good Faith in contract law and as a concept of contractual interpretation. In countries with civil law, it is maintained that there is a general need to bargain in good faith; however, the specifics of this requirement vary depending on the specific legal system. The centrality of the idea of good faith in numerous legal, philosophical, and moral situations is highlighted in this paper’s conclusion. Acting in good faith is crucial for upholding trust and fairness in our interactions with others, despite much controversy surrounding its definition and understanding.
Methodology Used
Legal experts have studied and discussed the idea of “Good Faith” in great detail because it is a cornerstone of many legal systems. To provide a thorough grasp of the concept, studying good faith necessitates applying several approaches. One technique for examining good faith is the logical method. To determine good faith, generic rules must be applied to specific circumstances. Using this method, a precise definition of “good faith” that may be used in various legal circumstances can be derived.
The historical method is another approach used to research good faith. This approach entails providing a comprehensive historical overview of how things have been and how they have changed since the dawn of faith throughout numerous historical eras. The historical approach aids in giving a thorough grasp of the idea of good faith, its development, and its use in various legal systems.
A crucial methodology for researching good faith is the comparative approach. This approach compares the rules of jurisprudence and good faith in various legal systems, such as the American legal system. Comparative law distinguishes between justice, objectivity, and good faith. To distinguish between these two ideas and decide if fairness and impartiality are instances of good faith, it is helpful to draw a line between them.
Moreover, comparative law examines Acquis international community law and Acquis common law community. To help people comprehend the idea of good faith, these two legal systems are contrasted. Studying good faith is essential to ascertain the legal ramifications of actions made by parties in diverse legal circumstances.
In conclusion, to provide a thorough grasp of the idea, studying good faith necessitates applying numerous approaches. Investigating legal communities, the historical method, the comparative technique, and the deductive approach are crucial to studying good faith. These techniques aid in developing a precise definition of good faith and a better comprehension of the legal ramifications of parties’ acts under various legal systems.
The meaning of the good faith principle
Good faith is a multidimensional idea that has been explained in many ways. Cicero provided one of the most thorough descriptions of trust. Cicero argues that “good faith” refers to all feelings of honesty and morality without the need for excessive detail.[1] Additionally, it outlaws legal-rescinding strategies like dishonest agreements, false computations, repulsive disappointments, models, and wickedness that preys on credibility, simplicity, and ignorance.
Although “good faith” is occasionally employed as a behavior norm, it is not always clearly defined, which can cause confusion. It is frequently viewed as a particular duty, giving rise to words like “duty of trust” or “obligation of trust.” In international contracts, the good faith concept may impose direct requirements of behavior on the parties and is occasionally viewed as a foundational principle of Lex mercatoria. The good faith concept might impose direct conduct requirements on the parties during the negotiation and execution of the contract.[2]
Good faith is valued differently under positive law, depending on the domain of law. But because of its objective nature, it has a specific significance in scholarly publications. It can be found in various legal disciplines, including family, property, inheritance, and gift. The use of good faith is not permitted in all of these situations under French or Belgian law. As a result, good faith is typically regarded as an ambiguous standard, the definition of which depends on the specifics of each scenario in which it should be used and which should be concretized.[3]
In the Netherlands, good faith is required in several legal fields, including private international law, business law, bankruptcy law, and inheritance law. It has been determined that good faith should be used in all legal contexts involving ownership right. Good faith transcends the distinction between private and public law in some legal systems, such as the German one. It is specifically stated in the civil codes of Quebec and Switzerland that each individual’s rights will be upheld following the standard of good faith.[4]
Good faith has become an important concept in recent developments in European law, Community law, international law, and the national laws of countries worldwide. It is necessary to incorporate it in either the Community Acquis, the International Acquis, or comparative law to appreciate its origins and the issues it faces. So, to comprehend the significance of the concept of good faith and how it is employed in various legal systems, it is necessary to understand where the concept originated.[5]
Historical overview of the Good Faith in different historical periods.
In this subsequent section of this paper, we will examine Roman law, law throughout the Middle Ages, and law during the XIX century, the age of the first codifications. Each of these distinct historical eras will be discussed in further detail below.
Presentation of good faith in Roman law of contracts
The good faith, however, could have been executed if the inspirational force of Greek mythology had not been present. The concepts of justice and equality were originally articulated in written form by several Stoic authors, including Pythagoras and Zeno. [6]One component of Roman law and practice was known as the formula system. The praetor was a clerk who met with citizens, heard their complaints, permitted or prohibited the actions of a particular lawsuit, verified allegations, and presented the case before the court. The praetor would only accept demands that could be articulated through precise, specified formulae.
Because there were only a certain number of formulas, the scope of the rights that might be asserted was severely limited. After the 150-year extension, the extension would be granted if the lender initially made certain that the formula was closely monitored. C., he possessed the necessary skills to create an original recipe. Rome’s expansion into the Mediterranean region occurred about this time. The number of praetors increased, creating new roles known as peregrine-foreign praetors. These praetors were tasked with settling conflicts between “foreigners” and those who were not citizens of Rome.
Throughout this period, there was a considerable shift in the technique. It is speculated that because the pilgrims were outside the city, they needed help using traditional mathematical equations. As a consequence, their legal rights were violated. [7]As a result, the praetor of foreigners resolved conflicts by using his own laws rather than the rules already in effect for citizens. This was done in place of the laws that were already in effect for people.[8]
The concept of being able to bring a lawsuit in good faith, also known as bona fide judiciary, originated from this principle. The historical era in which the works were written and the authors themselves affected the selection of these works. As a result, according to Cicero’s list, bona fide judicial applied to custody disputes and duties in addition to agency and sale and lease contracts. Two hundred years later, Gaius contributed to the lexicon by introducing the terms negotiorum gestorum, depositor, societas, and l’actio rei uxoriae. The list of rights to make claims was expanded by Justinian with the addition of actio praecriptis uerbis for trade and value contracts, claims for the division of wealth, and claims for assets owned by third parties.
At the tail end of the second century BC, the praetor to civil jus was the first person to introduce the right to file a lawsuit to resolve legal matters for which the law had not established the right to file a lawsuit (for example, those involving pilgrims to whom Roman law could not be applied) (civil law that applied only to Roman citizens). Thus, throughout this entire time, the good faith that permeated the right to sue allowed the judge to actively engage in the legal relationship that was protected by the good faith that permeated the right to sue (especially in determining the extent of the damage and in creating new obligations based on morality). Similarly, it would appear that contracts based on good faith also existed due to these legal rights to sue about such issues. [9]
These contracts included informal agreements that were interpreted by the broad judicial power. They were differentiated from formal contracts by their terms of legality and the fact that they were all negotiated in good faith. In addition, formal contracts were governed by legal precedents. According to the Bona Fides doctrine, the judge must decide what each party owes to the other. Based on this foundation, the principle of consensuality as the essential component of contract law was developed by Ius gentium. [10]
At that time, one of the most important aspects of civil law was the distinction between the consensual contract and other contracts. This distinction lay in the fact that the consensual contract was authorized by the “right to sue in matters of good faith,” which gave the judge discretion, particularly concerning the number of damages to be granted. Other contracts were authorized by the “right to sue in matters of bad faith.” Because of this right of action, the court was also given the authority to decide whether or not the behavior of a party was consistent with those of an “honest man.”
In this kind of contract, the judge’s interpretation was heavily influenced by the concept of good faith. Three different kinds of obligations significantly constrained the parties’ intentions: the essentiality, without which a lawsuit cannot exist (for example, the subject matter of the sale and the price paid in the contract of sale), naturalia, which are included in the contract unless expressly excluded by the parties (for example, the guarantee against infringing on intellectual property); and the essentiality, which (for example, the guarantee of obligations).[11]
The traditional example of a contract of sale frequently demonstrates Roman law’s practical application of the concept of trust.[12] This is due to the significance of the seller’s duty to disclose and guarantee any hidden flaws and to provide protection against the infringement of property rights. Additionally, a contract of sale is frequently used to demonstrate how Roman law’s application of the concept of trust can be implemented. The concept of legal abuse and the acceptance of the rebus sic stantibus principle are two additional examples among many others. It is essential to remember that these particular applications of the function of trust in Roman law can be easily transferred to today’s law.[13]
During the fourth and fifth centuries AD, various interpretations of the bonae fidei contractus concept emerged. Good faith agreements were negotiated without the awareness of any prospective disadvantages, with respect for the free exercise of one’s will, and without coercion or fraud. They were therefore excluded from any potential infractions. On the one hand, this criterion extended to the entire jus commune (the common law of all Christian-European countries) and, on the other hand, was more similar to aequitas. This was because Roman law limited the application of “bona fides” to contract law and process.
The good faith in Medieval rights.
The concept of “good faith,” also known as “bona fides,” was essential to the development of law throughout the Middle Ages. It came up due to the requirement to ensure that contracts were signed voluntarily and without any pressure or threats of coercion being applied to the parties involved.[14] The concept of acting trustworthy was not new; it could be found in Roman legal precedent. During the medieval period, however, it expanded to cover a wider area and was incorporated into a greater variety of internal and international trade aspects.
Around the 12th century, the method of contracting that involved the mutual exchange of permission developed into the usual way[15]. Consequently, the idea of ex nudo pacto actio non nasciture (which states that an uncomplicated agreement does not give rise to an absolute right) was later superseded by the concept of consensus obligatio (consent only suffices). Although this modification was difficult to implement, it helped establish the notion of good faith.[16]
The good faith in Nineteenth Century
Over the entirety of the 16th century, the concept of good faith grew to cover trade on both the domestic and international levels. At this time period, the concept of exception was also conceptualized for the first time. [17]Eventually, this idea would become the foundation of the theory of legal abuse. There is a practical overlap between the principles of good faith and equality due to the development of the good faith concept and its widespread usage in trade. This overlap is because the concept of good faith has become increasingly popular in recent years (aequitas). [18]
France and Germany held contradictory views regarding the relationship that should exist between equality and good faith.[19] Germany was the first country to distinguish between these concepts, while France only did so after the Byzantine era. Several French writers even believed that honesty was nothing more than a symbol of equality. The functions of equality and good faith were largely overlapping during the Byzantine period because of the growth of the concept of good faith during the Byzantine era.
The historical conflation of equality and good faith has affected not only the wording of Articles 1134-3 and 1135 of the French Civil Code but also the likeness of these articles to the articles in other civil codes. As a result of the misunderstanding, Dutch law, which has been significantly influenced by German law, has been subjected to terminological adjustments. The phrase “good faith” has been replaced in the most recent edition of the Civil Code in the Netherlands with “reason and equality.”
The period of Napoleon’s codifications establishes the meaning and function of good faith in modern law. While Roman and medieval law recognizes the significance ascribed to good faith, this age defines good faith’s definition and function in contemporary law. Napoleon’s codifications highlighted the significance of good faith as an essential component in forming contract law by highlighting its role as a foundational factor.
In this day and age, the concept of good faith continues to be an essential component of the legal system. It is widely applied in national legal systems and is recognized as a fundamental principle in the United Nations Convention on Contracts for the International Sale of Goods. Although the concept of good faith has evolved throughout history, the relevance of good faith in ensuring that contracts are entered into honestly and honorably has remained the same.[20]
The good faith in Nineteenth Century.
Very little information was available about the concept of trust at the time of the Napoleonic codification. [21]The notion that trust is based on “natural rights,” on the other hand, can be differentiated in a number of important ways from other propositions. In addition to that, it is utilized regularly in commercial transactions. Nonetheless, “using God to legitimize the existence of good faith automatically leads to the effect of this feature on the content of the norm,” as one author puts it. In some cases, this explains why good faith is mentioned in the preparatory work, even though there is neither a definition of good faith nor a comprehensive examination of it. If honesty was written into the French Civil Code of 1804 as a result of natural law, then the historical school and the positivist philosophy were the ones who initially established this authority during the nineteenth century.[22]
Similarly, the work of Emmanuel Kant, specifically Friedrich von Savigny, laid the groundwork for the historical school of thought. [23]This institution looked into the historical precedents for all the laws today. It was one of Savinji’s contemporaries named Auguste Comte who laid the groundwork for positivism, which can be defined as “a doctrine according to which the social sciences ought to be an empirical science, and law, accordingly handled as a social relations science in which the key role had experienced.” Positivism has its origins in the writings of Auguste Comte. [24]It is surprising to see the formation of trust in the BGB of 1900 after having already established in one’s mind the significance of these two schools of thought in the early nineteenth century. [25]
In addition, the idea had entirely lost its applicability, and new concepts for defining what constitutes good faith had come to the surface. The school of Begriffs jurisprudence developed as an intellectual response to the Freirechtsbewegung school of thought (Conceptual Jurisprudence). The first thing that needed to be done to circumvent the arbitrariness of the judge’s judgment was to acknowledge the statutory provision that had been formulated using both concrete and abstract ideas.[26]
The second goal, which was kicked off by Jhering’s efforts, was to relax the legislation and its application. This school of thought is especially relevant because it assisted in reviving the concept of good faith by encouraging the formation of an interpretive and supplementary judiciary. Additionally, the Freirechtsbewegung went so far as to say that it should secede from the law in order to give the latter any secondary importance. This was done in a manner that was very similar to what the Begriffs jurisprudence school had done.
The suggested directions from the judges could have been more specific and would have resulted in substantial uncertainty for both sides of the dispute. Trust, as a result, grew into a written rule that has permeated high growth in various diverse national systems. This is why there is no definition of trust. In addition, there is a disparity of opinion over the legal definition of what constitutes good faith. This grammatical and semantic blunder undoubtedly has repercussions for the function that good faith serves in the legal system of the modern day.[27]
The problems with the concept of Good Faith
The idea of good faith has been investigated and examined by many disciplines, including law. Being a fundamental idea in contractual interactions, trust has historically played a significant role in the development of legal systems. [28]The law’s duties, such as moralizing contractual relationships and minimizing disparities that may result from the principle of autonomy, highlight the significance of faith in the law. Nonetheless, legal professionals continue to need help with the concept of trust. However, applying trust in law does not have to be strict; it must only be adjusted within a particular framework. The concept’s suitability should be determined by its intended usage, restricting its use. As a result, it is important to think about the complexities surrounding trust and the options and strategies that can be used to rationalize it.[29]
Making a distinction between trust’s subjective and objective applications is one method to justify it. In the objective sense, trust is described as a strategy for moralizing contractual agreements and reducing potential disparities by the principle of autonomy. Contrarily, in the subjective definition, good faith is meant to give effect to the appearance and to defend the harmed party in a contractual relationship. Several legal systems divide a concept into objective and subjective definitions. Still, more than this distinction is needed to resolve the uncertainties surrounding the notion and the role of good faith.
The general lack of definition continues to be the main contributor to ambiguity in the concept of trust. Although the function of the idea of trust attracts curiosity, it is typically thought of as an open norm whose permission cannot be determined abstractly. Instead, it is based on the specifics of the subject to which it is to be applied and needs to be concretized. As a result, it isn’t easy to come up with a precise definition of trust that works in every circumstance.[30]
The ambiguity surrounding the application of trust in legal systems has been complicated. For instance, in contract law, the application of trust may result in the interpretation of the terms of the agreement and the settlement of any issues arising thereunder. [31]However, the absence of a precise concept of trust may lead to conflicting judgments that give legal professionals no clear direction. More difficulties may arise due to the subjective nature of trust, particularly regarding good faith. In many legal systems, the definition of good faith is left up to the courts to decide based on the particulars of each case, which is known as an “open norm.” This strategy, however, may result in erratic judgments and a lack of predictability for legal professionals. [32]
Legal systems have tried to offer more direction on how the trust should be applied to address the difficulties brought on by its ambiguity.[33] As an illustration, some legal systems have created particular legal doctrines and principles to direct the use of trust in contractual partnerships. The bounds for using a trust can be made clearer with these principles and doctrines, which can also increase the consistency of legal judgments.[34]
In conclusion, good faith and trust are key ideas in law, especially in contractual partnerships. Nonetheless, legal professionals continue to need help with the concept of trust. Although the distinction between trust’s objective and subjective meanings has been useful in justifying its application, a precise definition must be provided. To meet these problems, legal systems must keep developing precise legal doctrines and rules that will direct the use of trust and increase consistency in judicial rulings.[35]
Practical application of good faith
Over the entirety of the 20th century, the notion of good faith was quite successful in many legal systems in Europe. The “good faith” provision has become more applicable in a wider variety of contexts across most countries over the past few decades. The application sector has grown dramatically in many systems over the past few decades. It is utilized not only within the realm of contract law but also frequently outside of it, in the context of a variety of other legal systems. In the following parts, specific cases are discussed by first analyzing how the concept of good faith is applied.[36]
Good faith application in contract law.
The formation and interpretation of contracts both depend on the idea of good faith. Throughout the process of the contract’s negotiation, drafting, and execution, it serves as a representation of the parties’ confidence and trusts in one another. Acting in good faith is now widely acknowledged in many different legal systems, and its presence is necessary for establishing commercial relationships. The concept of good faith entails some responsibilities and commitments that parties owe to one another, and it is inextricably linked to the concepts of reasonableness and fairness. The need to act in good faith extends to both the pre-contractual period as well as the life of the contract itself. For example, in Albania, article 674 states: “the parties during the negotiation of the contract drafting must behave in good faith to one another. The party who knew or ought to know the cause of the contract invalidity and did not disclose it to the other party is liable to reimburse the damage suffered by the latter because he believed without fault in the contract’s validity.”[37]
The duty to inform before entering into a contract is a crucial component of the good faith principle. [38]While negotiating the terms and conditions of the contract, the parties are expected to supply all information essential to ensure that the other party has a complete understanding of the terms and conditions. Failure to disclose relevant information may result in legal responsibility for compensating the other party for any losses they have sustained due to relying on the provided information. It is possible that the contract will be deemed illegal for either error or fraud if there is a breach of the obligation to notify. Good faith is another factor to consider when determining whether or not a contract is legitimate.
Another important aspect of the notion is the role of honesty and integrity in the interpretation of legal documents like contracts. Good faith is the test used to evaluate contractual provisions that are obscure or ambiguous. [39]The exercise of good faith provides a framework for determining the intents of the parties, which must be based on the interpretation. In addition, good faith can be used to fulfill the obligations of an inferred contract term that the parties may have desired to include but did not specifically include in the original agreement.
The notion of good faith also applies to the process of carrying out the terms of the contract. When carrying out their responsibilities, the parties are obligated to behave in good faith; if they fail, they risk being held accountable for the damages sustained by the other party. Yet, maintaining good faith may limit a party’s ability to seek redress if performance is not met. For instance, a party is not allowed to restrict its performance or terminate the agreement because the other party has slightly violated the terms of the agreement.[40]
In conclusion, the development and interpretation of contracts depend on the concept of good faith. It serves as a basis for determining the parties’ intentions and encapsulates the trust and confidence they have in one another. The phrase “in good faith” refers to several responsibilities and commitments that one party owes to another, including the obligation to fully explain, comprehend, and abide by the terms of their agreements. Good faith provides a malleable and adaptive framework, making it possible to build contractual relationships and ensure that contractual dealings are fair and reasonable.
Good faith is a principle of contractual interpretation.
The concept of acting in good faith is essential to all different types of legal systems, including lex mercatoria, and it applies to contracts involving businesses. Instead of just using a literal translation of the terms, it is recommended that contracts be considered in good faith, which requires considering the parties’ genuine intentions rather than relying solely on a literal reading of the provisions. [41]This concept has been enhanced due to several international tribunal judgments that established the fundamental principle of good faith as an essential component of the performance of contracts.
In addition, the need to maintain good faith in business dealings has been emphasized by various international and European projects aimed at codification, such as the UNIDROIT Principles and the Principles of European Contract Law. These initiatives recognize that good faith should be exercised not only in the interpretation of a contract but also in the performance of the contract itself. UNIDROIT Principles Article 4.8 states, for example, that if the parties have not agreed upon a crucial term, a relevant term must be included, considering the parties’ intentions, the nature, and the purpose of the contract, as well as good faith and fair dealing.[42]
According to the good faith principle, each party to a contract is obligated to treat the other honestly and fairly while also abstaining from taking full advantage of the other party’s position. In addition, it requires the parties to communicate with one another in an open and honest manner and to work together to accomplish the contract’s primary purpose. As a result, the principle of good faith can be understood as a mechanism for simultaneously preventing disagreements and misunderstandings while simultaneously fostering collaboration and confidence between the parties to a contract.[43]
The flexibility to interpret and apply contractual clauses with greater discretion is one of the key benefits of the concept of good faith. This is due to the fact that it recognizes contracts as living agreements rather than mere pieces of static paperwork. Living agreements are subject to change and evolution throughout their duration. If, for example, a contractual obligation becomes impracticable or impossible to perform due to changes in the circumstances, the concept of good faith may obligate the parties to negotiate a new term or amend the previous one to reflect the altered circumstances.[44]
The idea of good faith does, however, come with a number of associated constraints and challenges. The fact that it can be difficult to define and apply in practice is one of the primary obstacles. This is especially true in situations involving complex or transnational transactions, when many legal systems and cultural norms may be at play simultaneously. However, there is a possibility that the concept of good faith will be used to support arbitrary interpretations or to impose moral duties on the parties that aren’t addressed in the agreement. This is because good faith may be exploited in these ways.[45]
Besides these challenges, the concept of good faith plays an important role in commercial contract law and is widely recognized for its significance. It provides a framework for understanding and carrying out flexible and adaptive contracts. It does so in a way that encourages cooperation and mutual trust between the participants in the agreement.[46]
There are a few different legal systems, one of which is the French Civil Code, that recognize the concept of good faith as a means to interpret the results of a contract. The idea of treating everyone fairly is inextricably intertwined with the practice of acting in good faith. The concept of good faith, which is used in translation, is now applicable to even formalized and documented contracts, and authorities can use it to amend the terms of a contract. Even while judges are often reluctant to go further than the parties’ goal, the principle of good faith is increasingly seen as a legitimate interpretation norm and a source of responsibility, as recognized by several legal scholars, laws, and treaties.[47]
UNIDROIT PRINCIPLES
The UNIDROIT principles offer many illustrations of how the concept of good faith can be put into practice. There are several situations in which “bad faith” is favored more than “good faith.” This makes it possible for this phrasing to depict prohibited behaviors accurately.[48] In this particular scenario, having an alternative interpretation is how good faith is determined. This document includes some general prohibition applications that aim to exclude or limit the parties’ confidence in one another. The clauses in this article concerning fraud, threat, and blatant injustice are binding since they are specified in Article 3.19.[49]
According to the observations, it would be a breach of trust to omit or modify these requirements from the contract in any way. A provision that either limits or excludes a party’s guilt for failing to carry out a duty or that allows a party to perform an obligation even though it has not been carried out” According to Article 7.1.6, it cannot be allowed if it will be materially unfair given the objective of the contract and substantially contradictory to how the other party reasonably expects to fulfill the obligation. In other words, it cannot be allowed if it will be materially unfair given the objective of the contract. [50]
Under the heading “Negotiations in Confidence” in Article 2.1.15 of the UNIDROIT Principles, there is a crucial reference to the objective of determining trust by its antonym: 1) Each side has the right to negotiate. Still, they are only required to do so if an agreement cannot be reached. 2).[51]Nonetheless, the party that negotiates in bad faith or walks away from a conversation is the one who is responsible for compensating the other party for their losses. 3) A party is considered negligent if it initiates or continues negotiations with another party while having the good faith intention of settling.
In addition, the following is stated in Article 3.5 regarding the cancellation of a contract due to an error: “(1) A party may only cancel a contract due to an error if the contract has already been ended, the error is significant enough that a person in a similar situation to the party to error would have entered into the contract only under materially different conditions or would not have entered into the contract at all if it recognized the true state of trade, and the party seeking to terminate the agreement has a good faith belief that the error caused the contract to be decided to enter into in the first place. Leaving the incorrect party in the wrong—whether because it committed the error or because the other side knew why he ought to be aware of it—was not against the fair treaty’s acceptable trading requirements.
Therefore, one party has the right to cancel a contract if it was caused by the other party’s fraudulent presentation, which includes any language, fraudulent practices, or circumstances that, under the reasonable trade standards of the fair agreement, the other party should have avoided. This is stated in Article 3.8 of the fraud statute, which states that one party has this right. In its stead, the following will apply, as stated in Article 3.10: “If one of the parties asserts that they have the right to cancel the agreement, the court may modify the terms of the contract so that it complies with the reasonable business norm of the fair agreement. A moral code intricately intertwined with the idea of fairness can also be referred to as “good faith” while discussing this notion. [52]
According to Article 3.10 of the principles, economic independence is breached whenever “the other party has taken an unfair advantage or has profited unjustly from the first party’s dependence, economic inequalities, or urgent needs, or its non-prediction, ignorance, lack of experience, or lack of negotiation skills.” In other words, the violation of economic independence occurs whenever “the other party has profited unjustly from the first party’s dependence, economic inequalities, or urgent needs.” To reiterate, the power of the court must be exercised in good faith in this particular case: “Upon the request of the party who is legally entitled to cancel the contract, the court can modify the terms of the contract so that it satisfies the requirements of an acceptable trade agreement.[53]
Conclusion
Good faith is difficult to define, and various meanings have been investigated. Definitions have concentrated on principles of morality; expected benefits (defining ill faith as the action that interferes with reasonable expectations), excluder analysis (identifying varieties of poor faith behavior), and discretion and missed chances. All of these definitions, to some extent, lack authority: “The assumption that good faith is the duty to take all reasonable steps to prevent depriving the other party of the advantage of the contract does not have stronger definitional significance than the assertion that a party’s good faith is the abstinence from recapturing foregone opportunities.
Nonetheless, the idea that good faith equates to the absence of bad faith is not redundant and is found in French and American law. No precise requirements of good faith may be made. As demonstrated in Sons of Thunder, only the lack of good or evil faith is actionable. That the concept of good faith implies some form of collective good that would lead to state paternalism should be dispelled by this definition using excluder analysis. Given the ambiguity in the third aspect of promissory estoppel, the idea leans more toward judicial paternalism. Contrary to promissory estoppel, whether a party to talks acted in bad faith is decided without reference to any metaphysical collective benefit aside from the individual interests of the persons involved.
There is no need for a code-based clause in a legal system where the judge’s position as a rule creator is fully acknowledged. A good faith clause would be necessary to ensure that the judge may make new regulations, particularly for a new continental code where the ECJ and other courts may need significant powers if there are still questions about the court’s authority. It would be more suitable to openly sanction that the court may interpret, augment, and corroborate the code as necessary, contrary to certain professors’ beliefs that the phrase of good faith ought to be applied for the sake of tradition. The good faith theory needs to be better established in Albania; however, there have been some controversies concerning it. This necessitates conversations between attorneys and academics and the evolution of the judicial practice.
Bibliographies
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[7] Philip Thomas, ‘Wishful Thinking; the Role and Development of Good Faith in the Roman Law of Contracts’ (2021) 51 Právněhistorické studie 19 <https://www.ceeol.com/search/article-detail?id=1006377> accessed 26 March 2023.
[8] Hilarius Bogbinder, ‘Brief Lives: Cicero (106-43 BC)’ (2022) 153 Philosophy Now 44 <https://www.pdcnet.org/philnow/content/philnow_2022_0153_0044_0046> accessed 26 March 2023.
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[13] Marie Seong-Hak Kim, Custom, Law, and Monarchy: A Legal History of Early Modern France (Oxford University Press 2021) <https://books.google.com/books?hl=en&lr=lang_en&id=gy5CEAAAQBAJ&oi=fnd&pg=PP1&dq=Levy> accessed 26 March 2023.
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