The Role of Managers’ Good Faith in Civil Liability

Mohsen  Mohammadifirooz; Habibolah Abdolahpoor

Authors

Mohsen Mohammadifirooz Department of Business Administration, Nima Non-Profit University, Mahmoudabad, Iran Author https://orcid.org/0009-0003-1914-2615
Habibolah Abdolahpoor Department of Criminal Law and Criminology, Kharazmi University, Tehran, Iran https://orcid.org/0009-0007-9105-0685

Keywords:

Good faith, Civil liability, Managerial conduct, Corporate governance, Legal responsibility, Risk management

Abstract

This study aims to examine and explain the role of managers’ good faith in shaping civil liability through an integrated legal–managerial framework grounded in doctrinal analysis and empirical evidence from Tehran-based organizations. The research adopted a qualitative–doctrinal design combining legal analysis with field-based inquiry. Doctrinal data were drawn from civil law sources, judicial decisions, and scholarly literature concerning good faith and civil liability. Empirical data were collected through semi-structured in-depth interviews with senior managers, corporate legal advisors, practicing attorneys, and university faculty in Tehran selected through purposive and snowball sampling until theoretical saturation was achieved. Supplementary materials included contractual documents, internal governance policies, dispute records, and selected judicial decisions. Data were analyzed using thematic qualitative analysis integrated with doctrinal legal interpretation, enabling continuous comparison between managerial practice and legal principles. The results demonstrate that managers’ good faith functions as a decisive structural determinant of civil liability formation. High levels of transparency, cooperative performance, proportional exercise of discretion, effective risk governance, and timely remedial responsiveness significantly reduce liability exposure. In contrast, opportunistic behavior, informational concealment, administrative obstruction, conflicted decision-making, and remedial passivity substantially intensify fault attribution, strengthen causal inferences, and expand compensable damages. The findings further indicate that good faith operates as an interpretive bridge through which courts and arbitral bodies infer managerial intent, assess negligence, and determine the scope of responsibility. Managers’ good faith constitutes a foundational governance mechanism that transforms ethical conduct into legally consequential behavior, systematically shaping the emergence, scope, and resolution of civil liability within organizational systems.

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