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

Signature Litigation—Catherine Naylor

Signature Litigation—Catherine Naylor

International fraud and asset recovery offering boosted by partner hire

Stevens & Bolton—Alexa Payet

Stevens & Bolton—Alexa Payet

Private wealth disputes team adds contentious probate specialist

Morgan Lewis—Paul Feldberg

Morgan Lewis—Paul Feldberg

Firm strengthens investigations and sanctions capabilities with London partner hire

NEWS
Cheshire West, which established an ‘acid test’ for deprivation of liberty safeguards, has been overturned by the Supreme Court
The Chancery Division and other segments of the High Court are to be replaced by a new Business and Property Division (BPD), in a major civil justice shakeup
Law firms that hold client money will need to file annual accountants’ reports and make a declaration, the Solicitors Regulation Authority (SRA) confirmed this week
Two district judges and a tribunal judge have been sanctioned for delays in delivering judgments and orders
Private equity (PE) investment into UK law firms halved to £250m last year, but deal volume rose, according to research by Acquira Professional Services’ Momentum private equity market tracker
back-to-top-scroll