Commercial agency and the duty to act in good faith

The duty of good faith occupies a central but contested place in commercial law. This Article examines how the duty to act in good faith applies in commercial agency relationships, focusing particularly on the framework established by European Union law. The Commercial Agents Directive has harmonized certain aspects of agency law across EU member states, but significant questions remain about the scope and content of the good faith obligation it imposes. Through comparative analysis of how different EU jurisdictions interpret and apply the good faith requirement, this Article reveals substantial variation in outcomes. Some jurisdictions interpret good faith as imposing minimal constraints on parties' self-interested behavior, while others derive from it extensive fiduciary-like obligations. The Article examines key contexts where the good faith duty becomes operative, including: the agent's duty to disclose information to the principal, limitations on the agent's ability to compete with the principal, the principal's obligations regarding compensation and territory, and the parties' duties during contract termination. The analysis demonstrates that courts often struggle to articulate coherent principles for determining when good faith requires a party to subordinate its interests to those of the other party. The Article proposes a framework for understanding the good faith duty that distinguishes between procedural obligations (relating to how parties interact) and substantive obligations (relating to the content of performance). It argues that this distinction can help courts apply the good faith standard more consistently while respecting parties' legitimate commercial interests. The Article also examines the relationship between the statutory duty of good faith and other legal doctrines, including fiduciary duties and implied contractual terms. It concludes with recommendations for legislative reform and judicial interpretation that would enhance legal certainty in this important area of commercial law.