Economic Analysis of Good faith in Contract Performance

The rule of necessity to respect the principle of good faith in performance of the contract is the result of union rights and ethics. Good faith in performance of the contract with subjective and objective criteria and using cost-benefit analysis, wealth maximization, game theory, efficiency and welfare standards, leading to the achievement of the objectives set by the parties of contract. Lack of good faith, commitment to the agreement eliminates and reduces the economic efficiency of the contracting system, because a result of breach or non-engagement, increase litigation and costs, while internalize adherence to commitment based on ethics, not cost. Based on the criterion of maximizing the wealth, when the contract between parties, increases utility and bring wealth to its rightful place that cheating or abuse intention not used and the contract is implemented in full and in accordance with the desire and intention of the contractual parties.