Good Faith in Corporate Law: Between Cognition and Propriety, or Whose Conscience Is It Anyway?

This Article investigates the dual nature of good faith in legal discourse and its implications for corporate law. Good faith can denote an objective legal standard of conduct, requiring restraint in advancing self-interest and cooperation with others, or a  subjective state of mind, defined by the absence of knowledge of adverse legal circumstances. These  two facets, debated by scholars since antiquity, intersect with equity and conscience, producing  enduring tensions between objectivity and subjectivity in legal institutions. Inspired by Lord Hoffmann’s speech in O’Neill v. Phillips, the Article situates good faith within a historical exchange between common law, equity, Roman law, and ecclesiastical traditions. It argues that the meaning of good faith varies with the relational context, where corporations feature several different ones: fiduciary relationships, marked by ascendancy and vulnerability in a “vertical” structure, require a subjective form of good faith to support self-abnegation; corporate bylaws and shareholder agreements, grounded in “horizontal” contractual relations, call for objective good faith that endorse self-enhancement; and hybrid contexts, such as those involving controlling shareholders, demand a combination and balance of both. Rather than offering a unified theory of good faith, the Article proposes a framework that recognizes the coexistence of subjective and objective elements, while highlighting their inseparability and the jurisprudential challenges they present.