Good Faith Clause

A good-faith clause is the contractual text that explicitly obligates the parties to the contract to act with integrity, honesty, and without circumvention in performing the contract and any relations arising from it. The principle of good faith embodies one of the pillars of the general theory of contracts, whether expressly included in the contract or impliedly derived from its nature. In the Saudi legal framework, the good faith rule is a fundamental pillar derived from Islamic jurisprudence, which prohibits fraud and circumvention and requires fulfillment of covenants. The Civil Transactions Law enshrines this principle with explicit provisions obligating contracting parties to perform their contracts in accordance with what their nature requires and what custom and integrity in dealings dictate. The Ejar platform has now incorporated good faith clauses in its standard contracts to affirm full contractual commitment. This clause holds particular practical importance in long-term tenancy contracts and major commercial contracts, where situations arise that were not anticipated at the time of contracting and require the parties' good faith in handling them. A landlord who raises rent excessively beyond the official index by exploiting the tenant's position may be considered in breach of the good faith principle.