Good Faith Duties in Contract Performance

Abstract

ABSTRACT There has been an ongoing debate in common law countries about the merits of recognising a general obligation to act in good faith in the performance of contracts. Courts in England, Australia, Canada and Singapore have responded differently to this possibility. However, courts in those jurisdictions have been prepared to imply a similar bundle of more specific duties that are increasingly seen as expressing the core content of any general principle of good faith in contract law. The ‘good faith’ duties promote loyalty or fidelity to the contractual relationship, primarily by requiring honesty and cooperation in contract performance and by precluding the exercise of discretionary contractual powers in a manner that is unreasonable or outside the proper purposes of the power. The presence of these duties in the relatively stable and commercially orientated contract law of the jurisdictions considered suggests that ideas of good faith need not produce undue uncertainty for contracting parties. On the other hand, the increasingly well-established operation of these more specific duties raises the question of what would be gained through recognising a general obligation of good faith performance in the common law of contract.