Good Faith and Contractual Resolution in Contracts with a Set Term

February 20, 2020, by Juan José Alcerro

The so-called principle of contract preservation has special importance in those contractual relationships for which the parties have agreed upon a certain term for its duration (that is, in those businesses where fulfillment will extend over time).

Indeed, from the express agreement with the establishment of a contractual term, it follows that for the parties, time is also a condition for the contract to produce the effects desired by them and to satisfy the need that induced them to contract. The duration of the contract, therefore, is not only tolerated by the parties, but desired by them, since the utility of the contract is also based on the time that has been provided for in it.

In contracts of a certain duration, time is also an element for fulfillment. The interest of the parties is not satisfied except through a performance planned over time. For this reason, it is said that time is linked to the object of the contract, given that the agreement cannot be fulfilled except through a temporal prolongation. The characteristic feature is that time is incorporated into the object, as a measure for the satisfaction of the parties’ interest [1].

Precisely because time is linked to the object of the contract, the grounds for unilateral termination of a contract agreed upon for a certain term are subject to strict and rigorous appreciation, insofar as it is a unilateral cessation of the bond, which constitutes an exception to the aforementioned principle of contract preservation. In businesses where a term was established in the interest of the parties, a supposed unilateral termination without a serious and sufficient, duly justified reason, or with a remediable breach, would be contrary to the law as well as to the principle of good faith and/or would constitute an abusive exercise of the contractual position.

In accordance with Article 1546 of the Honduran Civil Code, contracts must be executed in good faith. And that good faith, as a legal requirement in the contractual relationship, must also serve as a control in cases of a supposed unilateral termination of the bond. If obligations have been executed, unilateral withdrawal or termination cannot promote the mere release from the obligations of the party that terminates the bond, ignoring the consideration of the term. This can give rise to the unjust enrichment of the party that unilaterally withdraws from the contract, or be exercised in a way that constitutes an abuse of right.

“Good faith could be characterized as a criterion of conduct that is based on the fidelity of the contractual bond and on the commitment to satisfy the legitimate expectation of the other party: a commitment to put all one’s own resources at the service of the other party’s interest to the extent required by the type of obligatory relationship in question” [2].

Legal businesses, as a general rule, expire by mutual agreement of the parties; or by judicial declaration of resolution or termination when the non-fulfillment of obligations by one of the contractors is proven (Arts. 1386 of the Civil Code, 747 of the Commercial Code); by a judicial pronouncement of absolute or relative nullity, based on the existence of a cause concerning its invalidity (Art. 746 of the Commercial Code); or also by judicial pronouncement due to supervening impossibility and a break with the rebus sic stantibus principle (Art. 753 et seq. of the Commercial Code).

Outside of the above cases, the parties to a contract, by virtue of the ratio that inspires it, must adhere to the contractual purpose expressed ex ante (principle of contractual fidelity). This implies that the solitary will of one of them to depart from the content of the clauses they helped design, or to which they adhered as a sign of acceptance—one of them referring to the term or the validity of the respective contract—should be insufficient to produce the result of ending the contract—and, incidentally, depriving the contractual agreement of its legal effects—and interrupting its temporal survival: the contract is law for the parties; this is precisely its normative or obligatory force. For this reason, as a matter of principle, a contract with an express mention of a term must follow a highly restrictive criterion for the purposes of early termination, and, with the exception of those with an express termination clause (749 Commercial Code), there would always be a need for the contract to be resolved by a declaration of termination by judicial or competent authority.

Good faith, in short, as well as the aforementioned principle of contract preservation and the prohibition of the so-called abuse of right in the contractual sphere, come to be placed as a limit to the discretionary power of the parties to unilaterally and prematurely terminate those businesses of temporary duration in which trust constitutes the core support of the legal relationship.


  1. Cfr. Ernesto Rengifo García, Profesor de derecho de contratos en la Universidad Externado de Colombia, La Terminación y la Resolución Unilateral del Contrato, Bogotá, 2009
  2. EMILIO BETTI, Teoría general de las obligaciones, trad: José Luis de los Mozos, Madrid, Revista de Derecho Privado, Tomo I, 1969, p. 114.

Juan José Alcerro

jja@aguilarcastillolove.com

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