The following Commercial guidance note provides comprehensive and up to date legal information covering:
This Practice Note considers good faith in commercial agreements. It examines the concept of good faith and the extent to which it is applied in commercial agreements either as an express term or an implied term. It also considers agreements to negotiate in good faith, the approach to the duty of good faith in other jurisdictions, the application of Braganza duties in commercial agreements, and provides some drafting considerations in respect of good faith provisions.
The traditional approach adopted by English courts has been to avoid implying a duty of good faith into commercial agreements and ‘if parties wish to impose a duty [of good faith] they must do so expressly’ (Mid Essex Hospital Services). However, it appears from the decisions in Yam Seng Pte Limited v International Trade Corporation and Bates v Post Office Ltd, that the courts may look to imply a duty of good faith in certain types of commercial relationships considered to be ‘relational contracts’. If parties wish to ensure that a duty of good faith is not implied into a contract that may be considered a relational contract, it is now recommended to expressly exclude such a term in the contract.
The meaning of good faith has developed through case law and is heavily dependent on its context. Definitions include honesty
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234