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07 August 2015 / Dov Ohrenstein
Issue: 7664 / Categories: Features , Commercial
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In good faith?

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What is the impact of the good faith doctrine on commercial contracts, asks Dov Ohrenstein

As the Hon Marilyn Warren AC, Chief Justice of the Supreme Court of Victoria, wrote: “Whole forests have been felled to produce judicial and academic writing on the meaning of good faith in contract law” (see “Good faith: Where are we at?” (2010) 34 Melbourne University Law Review 344, 345).

Historically, the courts have been reluctant to adopt a doctrine of good faith in English contract law and generally took the approach that there is no legal principle of good faith in dealings between commercial contractual parties. For example:

  • Lord Steyn, wrote in 1997: “I have no heroic suggestion for the introduction of a general duty of good faith in our contract law. It is not necessary” (“Contract Law: Fulfilling the Reasonable Expectations of Honest Men” (1997) 133 Law Quarterly Review 433, 439).
  • Lord Justice Bingham stated in Interfoto Picture Library Ltd v Stiletto Visual Programmes [1989] QB 433, [1988] 1 All ER 348: “In many civil law systems, and
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