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  • Writer's pictureJonathan E. Pearl

A Few words about....Bad Faith

Updated: Nov 20, 2020

We all know it when we witness ‘bad faith’. It’s like a bad smell. You don’t really know how to describe it, but you know you don’t like it. Bad faith (or mala fides in Latin) is defined by the Cambridge English dictionary as “dishonest….or unacceptable behaviour”. Dishonesty is fairly easy to describe, but what about “unacceptable behaviour”?

Anyone watching the US Elections over the last couple of months, and especially since 3 November, will have been reading about the prevalence of “bad faith”. Bad faith arguments are very common in politics. Politicians are fond of taking proxy positions for rhetorical purposes. A classic example is “whataboutism”, where a previously unjustifiable position is justified on the basis that it’s similar to a position taken by one’s opponent. The Republican Party’s use of the “Biden Rule” to justify refusing to consider President Barack Obama’s nominee for Supreme Court Justice, Merrick Garland, is a case in point. There is no “Biden Rule” and in any case the circumstances they allude to were not identical.

Another bad faith tactic used by many politicians and others is what the historian Robert Proctor labelled as “agnotology” – or the use of misleading or inaccurate data designed to induce cultural ignorance. Proctor studied how from the 1950s onwards tobacco companies spread doubt about the link between smoking and cancer. Rather than directly criticizing the science itself, Big Tobacco consistently tried to highlight the uncertainty of a proven link between smoking and cancer. Common themes were: that something else was causing the cancer, or that there could be a link but it wasn’t a direct one, or that the people who are more likely to get cancer are more likely to smoke. These arguments were made deliberately to avoid admitting liability, while appearing to be concerned about public health at the same time.

The gun control debate in the US is similarly rife with bad faith arguments. The “the only way to stop a bad guy with a gun is a good guy with a gun” is a bad faith argument. The real argument is, accepting the existence of the 2nd Amendment, how to place reasonable curbs on private gun ownership. Gun control opponents also use agnotological arguments that other things, such as the availability of violent video games, cause gun violence – not the widespread availability of guns. This is despite the well-known fact that Japan, one of the largest consumers of violent video games, has one of the lowest rates of gun crime in the world.

But politics, and policy-making are rarely concerned with which facts are true, or whether the logic is valid. Politics usually involves a dispute over which facts are the most relevant to a debate and what logic should be followed when setting and enforcing laws.

The real problems begin where political rhetoric and agnotology bleeds into the legal sphere. So, we’ve been hearing repeatedly from Rudy Giuliani, President Trump’s attorney, on the TV that the 2020 US Election was “rigged” and there was rampant “voter fraud”. And yet allegations of “rigging” and “fraud” don’t appear in any of the formal legal pleadings being filed with the Courts. And in-person in Court Mr. Guiliani has been at pains to confirm that these cases are “not about fraud” – so his TV rantings are made in bad faith. [Ironically, one can go to prison for fraud, but not necessarily for bad faith.]

So I began thinking about what bad faith is, and where the boundaries are. It’s more difficult than you think.

All’s Fair in Love & War

They say that “all is fair in love and war”. But is it?

Soldiers waving a white flag and then firing when their enemy approaches to take prisoners is commonly seen as acting in bad faith, as is feigning civilian status. But the ‘ruses’ of war, which are intended to mislead the enemy or to induce him to act recklessly - such as decoys, mock operations, and deliberate misinformation are not considered ‘bad faith’. The reason for this may be that the ‘ruses’ mentioned do not involve a combatant deceiving his enemy about his legal status. Prisoners of war and civilians are protected under the 1949 Geneva Convention, soldiers– unless they become prisoners-of-war - are not.

Many will recall George W Bush’s administration arguing that Islamic Extremists captured and held at Guantanamo Bay weren’t subject to the Geneva Convention because they weren’t ‘lawful’ combatants under US law - which highlights another problem in this area.

The wonderful 1956 film “The Man Who Never Was” tells the true WWII story of a British attempt to trick the Nazi’s into weakening Sicily's defences before a planned attack, using a dead man, with a fake identity and carrying faked secret military plans. The film is full of British daring-do, and doesn’t remotely suggest any bad faith. In fact the guy who devised the plan is portrayed as the hero of the film, as he was in real life. I don’t think that the Germans’ film version of the same story would have been nearly so kind about this deliberate deception.

You may know that Protocol I to the Geneva Conventions prohibits attacking people who are parachuting from an aircraft in distress – regardless of what territory they are over. Once they land in territory controlled by the enemy, they must be given an opportunity to surrender before being attacked, unless it is apparent that they are engaging in a hostile act or attempting to escape. However the same rules DON’T apply to airborne troops, special forces, spies, saboteurs, or intelligence officers. The latter categories of ne’re-do-wells descending by parachute ARE legitimate targets and, therefore, may be attacked, even if their aircraft is in distress. But how could you possibly know the intentions of parachutists as they fall from the sky?

Seems to me that the rules of War are pretty opaque on what is “fair” or “unfair” in some instances.

Bad faith in the law

The current standard English law definition of "bad faith" comes from Lennox J in Gromax Plasticulture Ltd. v. Don and Low Nonwovens Ltd: "Plainly it includes dishonesty and…..some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined. Parliament has wisely not attempted to explain in detail what is or is not bad faith in this context; how far a dealing must so fall-short in order to amount to bad faith is a matter best left to be adjudged not by some paraphrase by the Courts (which leads to the danger of the Courts then construing not the Act but the paraphrase) but by reference to the words of the Act and upon a regard to all material surrounding circumstances.” Well, that’s clear then!

What about bad faith in contract drafting?

We’ve all come across the “gotcha” clause buried in Terms & Conditions – and usually in very small print. Sometimes the drafters even use language which is (hereuntobefore) difficult to understand (who knew?).

As lawyers we’ve all drafted Terms & Conditions and we do our very best to throw in the kitchen-sink when seeking to protect and limit our clients’ liability. And so we should. A lawyer’s job is to protect his client, right?

So, what do we feel about mandating Arbitration in standard form Ts&Cs? If your client wants its customers to agree to Arbitration over Court proceedings because it wants to limit bad publicity about lawsuits and complaints - that’s not bad faith, right? Well maybe. There’s a big movement amongst the plaintiffs’ Bar in many countries to ban mandatory Arbitration in certain standard-form contracts because, they say, it limits the chances of class actions being mounted. (Well…. Duh!! Hands up if you’re a large corporate who likes class actions?)

And what about bad faith in contract negotiation?

I don’t know about you, but I want to ensure I get the best possible conditions for conducting contract negotiations. But have you ever cancelled a negotiation session last minute, or made your client difficult to get hold of at crucial times? Have you ever imposed pre-conditions to bargaining? Like, “….our client will meet yours, but only in City X and only if the following people are at the meeting”? Of course you have.

Have you gone to a negotiation meeting KNOWING that there are crucial concessions that will need to be escalated to people outside the room for approval? If you have, at its worst, that’s bad faith – as you have insufficient authority to bargain.

Have you done any of these?

- Refused to provide information useful to the other side?

- Made ‘take it or leave it’ offers?

- By-passed an intermediary in order to broker a deal direct?

- Reduced an offer that had previously been made (a.k.a Gazundering)?

- Changed your mind on an offer from one party when another party offers you more

(a.k.a. Gazumping)?

- Reached final written terms on a contract but then not actually signed on the dotted-line

for one reason or another? Or

- Made a ridiculous ‘low ball’ offer?

If the honest answer is ‘yes’ then you should know that all of these can be easily characterised as ‘bad faith’.

So, does any of this matter? In the words of Dale Carnegie in ‘How to Win Friends and Influence People':A man convinced against his will is of the same opinion still”. But generally speaking acting in bad faith doesn’t lead to good outcomes – even for those doing the bad faith acting. In their 2017 paper “Getting Less: When Negotiating Harms Post-Agreement Performance”, Hart and Schweitzer found that hard-ball negotiators can win the negotiation, but without the value they expected. In short: if you beat down the price with the painter decorating your house, you may be OK with the low cost, but you may be less happy with the workmanship and materials used.

It’s unlikely that Rudy Guiliani’s claims of “rampant voter fraud” will lead to the US 2020 Election being overturned – even if these claims become folklore. Everyone now knows the link between smoking tobacco and cancer, and that Big Tobacco hid the truth for years. And companies that swindle their customers and then hide behind their legal terms and conditions will be punished quickly and effectively in the age of social media.

We all know when behaviour or arguments smell due to bad faith – even if we can’t put our finger on why. The very best reason not to engage in bad faith tactics is that, even if successful in the short term, the end result is unlikely to be good, or stand the test of time.

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