This article examines a different aspect of the law on good faith, namely, when a requirement of good faith will be implied into a contract. We also identify the kind of obligations that good faith imposes on contracting parties, and consider whether you can expressly exclude these obligations from your contract. While this question has not been examined by the Australian High Court,1 in NSW at least, the case law indicates that a duty of good faith will be implied into contracts in certain circumstances. However, when it has been implied, courts have adopted different approaches to defining what the duty entails.
By admin Introduction Since the early s, Australian judicial system has experienced a great flux revolving around the notion of good faith in the performance the enforcement of contracts.
In order to correctly assess the extent to which the High Court of Australia should recognize that in all contracts, parties have an implied obligation of good faith and fair dealing in the performance and enforcement of the contract, we need to observe the current state of law and judge the possible effect of universal implication of good faith in contract law Good faith in australia law such jurisprudential background.
State of common law Australia has long adopted the judicial role of gap filling in contracts through terms implied in law and in fact.
When a term is implied in law, the terms are implied in all contracts of a particular class or description.
Courts imply these general terms due to: The concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or perhaps, be seriously undermined. Secondly, implication of terms in fact provides a more specific implied terms based on the specific contract and its surrounding circumstances.
Apart from the doctrines of implying terms that are relevant with the duty of good faith in contract the court also held valid a number of other duties and obligations, such as the duty to cooperation.
The courts may interpret the [discretionary] power as not extending to the actions proposed by the party in whom the power is vested or, alternatively, conclude that the powers are being exercised in a capricious or arbitrary manner or for an extraneous purpose Lastly, an implied duty to act reasonably is manifested through Renard, through the constructive analysis of the cl It is evident that without the universal recognition of good faith in all contracts, the judicial are decently armed in dealing with unconscionable and capricious performances and enforcements of contracts.
However, we must be mindful of the different originality of the case law and legislative body in Australia and those of United States. Anglo-Australian contract law as to the implication of terms has heretofore developed differently…….
Importing legislation from a nation of dissimilar jurisprudential background is likey to create inconsistency in our current legal framework. Not only is the notion of good faith irreconcilable with existing common law, the concept itself is vastly uncertain and open to interpretation.
It has been criticized that the misapplication of good faith in contract in US has created a state of confusion leading to irreconcilable decisions.
The illusory nature of good faith will have a negative impact on our established legal system: The predictability of the legal outcome of a case in more important that absolute justice…….
Certainty is undoubtedly one of the most fundamental concepts of our legal system, without it the system loses it efficiency, justice and creates unnecessary litigation. Such uncertainty would increase the difference between the rich and the poor, tilting the balance towards the already well resourced side.
Well resourced litigant will be encouraged to have their rights litigated in the court, while driving away those not so well resourced litigants as they are unwilling to cope with the transaction cost of the process.
Undoubtedly, the existing doctrines of gap filling and various duties provide the certainty and consistency our legal system requires. The emphasis is upon the liberty to create contract is evidently depicted by Jessel MR in Printing and Numerical Registering Co v Sampson Contracts when entered into freely shall be held sacred and shall be enforced…….
The courts should not be too eager to interfere in the commercial conduct of the parties, especially where all the parties are wealthy, experienced, commercial entities able to attend to their own interest. Large corporations can be presumed to be able to fend for themselves without the need of legal interference, may develop dependence and uncertainty generating unnecessary litigation.
Contrariwise, the already developed principles of law would be a more desirable approach. While, they may result to some injustices by not adopting the universal implication of good faith, it would be preferable to promote contracting freedom and careful drafting than absolute justice.
An argument in support of universal good faith may arise with the concern for vulnerable contracting parties that are not so experienced, well resourced or legally minded. The courts have recognized some extent the need for judicial interference, where parties have significant less bargaining power or of special vulnerability.
Universal implication of good faith may allow the courts to consider public policy to achieve fairness in commercial conduct. Furthermore, even in the event where the existing common law principles fails to bring justice to those vulnerable, ample defenses in the form of statute exists to fend of unreasonable and unconscionable conducts in contract.
In fact, those in need of judicial interference are much more likely to benefit from those legislations than an overarching, uncertain notion of good faith. Conclusion Over the past centuries, the common law developed numerous doctrines to regulate fairness in the commercial realm, there is no valid reason to disturb their current status with a universal implication of good faith.Good Faith.
Honesty; a sincere intention to deal fairly with others. Good faith is an abstract and comprehensive term that encompasses a sincere belief or motive without any malice or the desire to defraud others.
It derives from the translation of the Latin term bona fide, and courts use the two terms interchangeably.. The term good faith is used in many areas of the law but has special.
· Under common law, good faith requires parties to an agreement to exercise their powers reasonably and not arbitrarily or for some irrelevant purpose. Certain conduct may lack good faith if one party acts dishonestly, or fails to have regard to the legitimate interests of the other initiativeblog.com://initiativeblog.com /acting-in-good-faith.
· The doctrine of good faith in Australia remains largely a construct of common law, with the obligation to act in good faith being implied either by a Court at the pleading of an applicant, or otherwise included as an express term in a initiativeblog.com+Law/The+good+the+bad.
· Enforcement of good faith in Australia. The use of ‘good faith’ in commercial contracts is an area of law that has been developing in Australia over the past 20 years and remains unsettled due to GOOD FAITH –ENFORCEMENT IN initiativeblog.com://initiativeblog.com faith.
GOOD FAITH IN INSURANCE LAW Good Faith: A study Good faith is required in a wide range of situations, including contracts and business dealings, as well as during mediation, arbitration orsettlement negotiations in a personal injury or similar tort initiativeblog.com://initiativeblog.com A LOOK AT “GOOD FAITH” IN THE COMMON LAW Shen Yang Lee Introduction This essay will answer three questions in three parts initiativeblog.com