Good faith

Question 1

Yam Seng Pte Ltd v International Trade Corp Ltd [2013]

implied term of good faith in relational contract

Answer 1

• Courts can imply a term of perform a contract in good faith
• general view is that good faith is not recognised in English contract law

Question 2

Bates v Post Office Ltd (No 3) [2019]

postmasters’ contracts (Horizon); implied term of good faith in relational contract

Answer 2

following characteristics are relevant as to whether a contract is a relational one or not:

1. must be no specific express terms in the contract that prevents a duty of good faith being implied into the contract.
2. The contract will be a long-term one, with the mutual intention of the parties being that there will be a long-term relationship.
3. The parties must intend that their respective roles be performed with integrity, and with fidelity to their bargain.
4. The parties will be committed to collaborating with one another in the performance of the contract.
5. The spirits and objectives of their venture may not be capable of being expressed exhaustively in a written contract.
6. They will each repose trust and confidence in one another, but of a different kind to that involved in fiduciary relationships.
7. The contract in question will involve a high degree of communication, co-operation and predictable performance based on mutual trust and confidence, and expectations of loyalty.
8. There may be a degree of significant investment by one party (or both) in the venture. This significant investment may be, in some cases, more accurately described as substantial financial commitment.
9. Exclusivity of the relationship may also be present.