Wayne Benjamin Courtney

GOOD FAITH IN CONTRACTS: IS THERE AN IMPLIED PROMISE TO ACT HONESTLY?

This article critiques the model for implementation of good faith suggested by Leggatt J’s obiter comments in Yam Seng Pte Ltd v International Trade Corp Ltd . He considered that a general term of good faith may be implied as a matter of construction or as a factual implication under traditional implied terms rules; and that further terms might be implied as specific manifestations of the general term. These further terms would reflect “shared values and norms of behaviour”, including the “core value of honesty”. The article contends that the reasoning to support the general implication contradicts the proposition — accepted by Leggatt J — that good faith has not been recognised “as a duty implied by law”; and that, for several reasons, the analysis used to support implication on the basis of shared norms is flawed.