header-logo header-logo

25 March 2016 / Chris Nillesen
Issue: 7692 / Categories: Features , Commercial
printer mail-detail

Keeping the faith

001_nlj_7692_nillesen

Can good faith be contractually implied, asks Chris Nillesen

The recent case of Portsmouth City Council v Ensign Highways Ltd [2015] EWHC 1969 (TCC), [2015] All ER (D) 146 (Jul) ( PCC ) sheds further light on the continuing debate on how good faith should (if at all) be implied in English contract law.

While English courts accept that parties to a contract cannot act fraudulently or dishonestly they have generally shied away from implying a duty of good faith. The concept of good faith is based on honesty and fair dealing. Bad faith, by way of contrast, has been distinguished from dishonest behaviour as behaviour that is “improper, commercially unacceptable or unconscionable”.

Parties to a contractual dispute are quick to convince themselves that the conduct of the other party was in “bad faith”. Morally there is perhaps an obligation to act in good faith, however can this be contractually implied?

English courts have reasoned primarily on the following three grounds that it is not appropriate to imply such a duty:

  1. Courts should principally avoid
If you are not a subscriber, subscribe now to read this content
If you are already a subscriber sign in
...or Register for two weeks' free access to subscriber content

MOVERS & SHAKERS

Gibson Dunn—Richard Surtees

Gibson Dunn—Richard Surtees

Gibson Dunn adds employee benefits and executive compensation practice in London with partner Richard Surtees

Laytons ETL—Alec Cameron

Laytons ETL—Alec Cameron

Laytons ETL appoints new partner and head of intellectual property disputes

Muckle LLP—Roland Fairlamb

Muckle LLP—Roland Fairlamb

Specialist associate solicitor rejoins Muckle’s leading employment team

NEWS
A series of recent decisions has clarified important principles across property law, from perpetuities to lease renewals and public rights over land
Employers cannot rely on wellbeing services alone to defend workplace stress claims after a High Court decision awarding almost £1m to an overworked employee
Andy Burnham's brand of 'Manchesterism' could offer fresh thinking on legal aid and access to justice if it reaches Westminster, according to Roger Smith, NLJ columnist and former director of JUSTICE
The constitutional fallout from a change of prime minister, rather than the politics, is under scrutiny as questions arise over the limits of executive authority in a leadership transition
The legal profession is undergoing a fundamental shift from selling services to creating technology-enabled products, according to Professor Luke Mason, Head of School of Law at Regent's University London
back-to-top-scroll