The examples he cited as falling within the definition of a included joint venture agreements, franchise agreements and the type of long-term distributorship that was the subject of this dispute.
Other examples, though not mentioned specifically, would also likely have included certain types of construction and engineering contracts.
Those working in the construction industry will be aware that many standard forms of contract used domestically include obligations that could be commonly construed as good faith-type obligations.
Examples are perhaps most obviously apparent in partnering contracts and in clause 10.1 of the NEC3, which states that the parties should act in accordance with the Contract and in a spirit of mutual trust and cooperation.
Under this contract, Compass was required to meet certain agreed performance levels and criteria.
Failure to meet the agreed performance levels or criteria by Compass would result in the levying of certain deductions.
There is no generally accepted definition of the concept under English law, but in the same judgment, Lord Justice Bingham described good faith as being most aptly conveyed by colloquialisms such as .
If the term is not expressly defined in a contract, parties will have scope for argument about what an obligation of good faith in a particular context means.
Whilst it is accepted that broad concepts of fair dealing can be reflected in the English court’s response to questions of construction and the implication of terms, the long-standing position under English contract law is that courts have been reluctant to recognise any general pervasive duty of good faith.4 The historical reluctance of the courts to imply a general duty of good faith is due in part to concerns that doing so would likely undermine contractual certainty.
Instead, the English courts have, as Lord Justice Bingham put it in .