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Implied Terms: the Foundation in Good Faith and Fair Dealing LSE Research Online URL for This Paper: Version: Accepted Version
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by LSE Research Online Implied terms: the foundation in good faith and fair dealing LSE Research Online URL for this paper: http://eprints.lse.ac.uk/101641/ Version: Accepted Version Article: Collins, Hugh (2014) Implied terms: the foundation in good faith and fair dealing. Current Legal Problems, 67 (1). 297 - 331. ISSN 0070-1998 https://doi.org/10.1093/clp/cuu002 Reuse Items deposited in LSE Research Online are protected by copyright, with all rights reserved unless indicated otherwise. They may be downloaded and/or printed for private study, or other acts as permitted by national copyright laws. The publisher or other rights holders may allow further reproduction and re-use of the full text version. This is indicated by the licence information on the LSE Research Online record for the item. [email protected] https://eprints.lse.ac.uk/ Implied Terms: the Foundation in Good Faith and Fair Dealing Hugh Collins* Confusion as much as controversy permeates the subject of implied terms in contracts. Controversy always surrounds their purpose and legitimacy, for implied terms lie on the point of friction between the basic disposition of the common law to respect freedom of contract and the regulatory impulse to prevent the worst instances of market exploitation and opportunism. Implied terms permit judicial intervention whilst maintaining the appearance of conformity to the idea of respecting the parties’ self-determination. Confusion now reigns as well, however, for there is no consensus on the legal tests for the introduction of implied terms into contracts, even to the extent of losing them altogether within the nebula of the interpretation of contracts. -
(A) Forte Prelims
GOOD FAITH IN CONTRACT AND PROPERTY GOOD FAITH IN CONTRACT AND PROPERTY Edited by A. D. M. Forte OXFORD – PORTLAND OREGON 1999 Hart Publishing Oxford and Portland, Oregon Published in North America (US and Canada) by Hart Publishing c/o International Specialized Book Services 5804 NE Hassalo Street Portland, Oregon 97213-3644 USA Distributed in the Netherlands, Belgium and Luxembourg by Intersentia, Churchillaan 108 B2900 Schoten Antwerpen Belgium Distributed in Australia and New Zealand by Federation Press John St Leichhardt NSW 2000 © The contributors severally 1999 The contributors have asserted their right under the Copyright, Designs and Patents Act 1988, to be identified as the authors of this work Hart Publishing Ltd is a specialist legal publisher based in Oxford, England. To order further copies of this book or to request a list of other publications please write to: Hart Publishing Ltd, Salter’s Boatyard, Oxford OX1 4LB Telephone: +44 (0)1865 245533 or Fax: +44 (0)1865 794882 e-mail: [email protected] British Library Cataloguing in Publication Data Data Available ISBN 1 84113–047–8 Typeset by Hope Services (Abingdon) Ltd. Printed in Great Britain on acid-free paper by Biddles Ltd, Guildford and Kings Lynn. CONTENTS Table of Cases xi Table of Legislation and Delegated Legislation xix Table of International Conventions and Principles xxiii Preface The Right Honourable the Lord Rodger of Earlsferry, Lord President xiv 1. Introduction 1 A.D.M. Forte 2. Good Faith in the Scots Law of Contract: An Undisclosed Principle? 5 Hector L. MacQueen 3. Good Faith: A Matter of Principle? 39 Ewan McKendrick 4. -
The Negotiation Stage
Part I The negotiation stage M02_HALS8786_02_SE_C02.indd 17 7/19/12 3:47 PM M02_HALS8786_02_SE_C02.indd 18 7/19/12 3:47 PM 2 Negotiating the contract Introduction Lord Atkin once remarked that: ‘Businessmen habitually . trust to luck or the good faith of the other party . .’.1 This comment2 provides more than an insight into the motivations of businessmen. It also implicitly acknowledges a limitation of the common law in policing the activities of contractors: the law no more ensures the good faith of your contractual partner than it guarantees your good fortune in business dealings. However, this might not be an accurate description of the purpose of the law relating to pre-contractual negotiations. In an important judgment that was notable for its attempt to place the legal principles under discussion in a broader doctrinal and comparative context Bingham LJ in the Court of Appeal observed that:3 In many civil law systems, and perhaps in most legal systems outside the common law world, the law of obligations recognises and enforces an overriding principle that in making and carrying out contracts parties should act in good faith . It is in essence a principle of fair and open dealing . English law has, characteristically, committed itself to no such overriding principle but has developed piecemeal solutions to demonstrated problems of unfairness. This judgment makes it clear that the gap between civil and common-law jurisdictions is exaggerated by observations at too high a level of generality. While it is true to say that the common law does not explicitly adopt a principle of good faith, it is as obviously untrue to say that the common law encourages bad faith. -
Misrepresentation
5 – MISREPRESENTATION Contract law does not have specific principle requiring disclosure, but there are certain cases where it is needed. Where there is misrepresentation, non-disclosure or mistake, the possible responses are: 1. The contract is void ab initio 2. The contract is voidable via rescission 3. The contract can be rectified to correct the mistake (see previous supervisions) 4. Damages can be awarded to remedy the wrong Where the issue is a statement made in course of negotiations, the remedy will depend on classification of the statement: 1. Contractual term (a ‘warranty’) – damages for breach of contract, possibly termination for breach (depending on nature of term) 2. Misrepresentation – rescission (subject to bars), and potential tort or Misrepresentation Act 1967 damages At one point, misrepresentation could be ground for rescission and damages were available only under the tort of deceit if there was fraud; no damages for innocent misrep. In Hedley Byrne v Heller (1964), HOL made clear breach of the DOC to avoid negligent misstatement could give rise to damages. 1967 Misrepresentation Act extended damages under s 2(1) to the case of misrepresentation inducing a contract where the representor cannot prove absence of negligence or bad faith. This made inference of collateral contract less necessary, although still necessary because representations as to future are harder to fit in scope of Act. Categorising statements made in negotiations Mere puffs These have no legal effect, they mean nothing - Dimmock v Hallett (1866) -
The Basis of Contractual Duties of Good Faith
Paul Davis Printer's Version 2.0 (Do Not Delete) 5/25/2019 12:31 PM THE BASIS OF CONTRACTUAL DUTIES OF GOOD FAITH PAUL S DAVIES* ABSTRACT. This article considers the basis of duties of good faith where not expressly provided for by the parties. It analyses the different approaches adopted in Canada and England and Wales, and assesses whether good faith is part of an ‘irreducible core’ of contract law or whether it should only be introduced into a contract through the mechanism of implied terms. It is suggested that the latter approach is preferable, and that (in the commercial context at least) courts should be wary about imposing duties of good faith on parties who did not provide for such duties. Well-advised commercial parties who wish particular duties to govern their relationship should be encouraged to stipulate such duties expressly in their contract. KEYWORDS: Contract, good faith, implied terms, Bhasin v Hrynew, Yam Seng, interpretation, commercial law. In Bhasin v Hrynew, Cromwell J rightly observed that “[t]he jurisprudence is not always very clear about the source of the good faith obligations found in [contract] cases”.1 Such *Professor of Commercial Law, University College London. I am grateful for the comments of participants at the very stimulating conference on “Good Faith in Contract” held at the Université de Montréal in May 2018 where an earlier version of this article was presented, and especially to Matthew Harrington for the invitation. Even earlier versions of this article were presented at a Chancery Bar Association seminar on “Contractual Discretions” held at the Inner Temple, London, in March 2018, and at a workshop on “Contract Interpretation: A Comparative Discussion” held at the University of Lund, Sweden, in April 2018 (following the very kind 1 Paul Davis Printer's Version 2.0 (Do Not Delete) 5/25/2019 12:31 PM 2 JOURNAL OF COMMONWEALTH LAW [Vol. -
The Role of Good Faith in the Performance of Commercial Contracts
Good faith, or a good fake? The role of good faith in the performance of commercial contracts Edward Elvin A dissertation submitted in partial fulfillment of the degree of Bachelor of Laws (with Honours) at the University of Otago October 2015 Acknowledgements Thank you to my supervisor, Jess Palmer. Your patience and support throughout a busy year have been invaluable. Without your encouragement I doubt whether these words would have made it onto the page. Thank you to my awesome family for always being willing to pick up the phone and lend and ear when I needed one. I must give specific mention to my mum, Fiona, and my sister, Rebecca. Your edits and suggestions added polish and direction when I needed it. Finally, thank you to my friends for making law school such a pleasure. Thanks Adam, Emily and Morgan for being rock-solid. 1 CONTENTS CHAPTER 1: INTRODUCTION .................................................................................................. 3 CHAPTER 2: THE CURRENT ROLE OF GOOD FAITH. .................................................. 6 2.1 Recent Common Law Development ................................................................................................. 6 2.2 Good faith in International Sales Law ........................................................................................ 11 2.3 Good faith in civil law ....................................................................................................................... 12 2.4 The role of Good faith in New Zealand: .................................................................................... -
Implied Terms: the Foundation in Good Faith and Fair Dealing LSE Research Online URL for This Paper: Version: Accepted Version
Implied terms: the foundation in good faith and fair dealing LSE Research Online URL for this paper: http://eprints.lse.ac.uk/101641/ Version: Accepted Version Article: Collins, Hugh ORCID: 0000-0002-2142-2208 (2014) Implied terms: the foundation in good faith and fair dealing. Current Legal Problems, 67 (1). 297 - 331. ISSN 0070-1998 https://doi.org/10.1093/clp/cuu002 Reuse Items deposited in LSE Research Online are protected by copyright, with all rights reserved unless indicated otherwise. They may be downloaded and/or printed for private study, or other acts as permitted by national copyright laws. The publisher or other rights holders may allow further reproduction and re-use of the full text version. This is indicated by the licence information on the LSE Research Online record for the item. [email protected] https://eprints.lse.ac.uk/ Implied Terms: the Foundation in Good Faith and Fair Dealing Hugh Collins* Confusion as much as controversy permeates the subject of implied terms in contracts. Controversy always surrounds their purpose and legitimacy, for implied terms lie on the point of friction between the basic disposition of the common law to respect freedom of contract and the regulatory impulse to prevent the worst instances of market exploitation and opportunism. Implied terms permit judicial intervention whilst maintaining the appearance of conformity to the idea of respecting the parties’ self-determination. Confusion now reigns as well, however, for there is no consensus on the legal tests for the introduction of implied terms into contracts, even to the extent of losing them altogether within the nebula of the interpretation of contracts. -
The Basis of Contractual Duties of Good Faith
THE BASIS OF CONTRACTUAL DUTIES OF GOOD FAITH Paul S Davies* In Bhasin v Hrynew, Cromwell J rightly observed that “[t]he jurisprudence is not always very clear about the source of the good faith obligations found in [contract] cases”.1 Such confusion is lamentable. This paper will consider the basis of obligations of good faith in circumstances where there is no express term of the contract which provides for good faith performance of the contract. Twenty years ago, Sir Thomas Bingham described good faith as “[t]he most important contractual issue of our time”.2 In the recent past, some pressure towards recognising a general obligation of good faith has been exerted on the law of England and Wales by drives towards a greater degree of harmonisation within the European Union.3 As a result of the United Kingdom’s decision to leave the EU, such external influences are no longer likely to have much significance. But instead of looking outwards towards civilian jurisdictions, there is now a greater push towards an inwards-facing view of good faith as intrinsic to the very essence of contract and inherent in all contracts. It is notable that debates concerning good faith are of increasing prominence in all major common law jurisdictions.4 * Professor of Commercial Law, University College London. I am grateful for the comments of participants at the very stimulating conference on “Good Faith in Contract” held at the Université de Montréal in May 2018 where an earlier version of this article was presented, and especially to Matthew Harrington for the invitation. -
The Shrouded Acceptance of Good Faith As a General Rule of Contract Law on the British Isles Jan Van Dunné*
On a Clear Day, You Can See the Continent—The Shrouded Acceptance of Good Faith as a General Rule of Contract Law on the British Isles Jan van Dunné* Civil law; Common law; Comparative law; Contracts; France; Good faith Introduction With its decisions in Yam Seng and Mid Essex Hospital the High Court has given a striking contribution to the discussion that developed over the last decades about what role the civil law concept of “good faith” may take in the contract law of a common law jurisdiction such as that of the UK.1 Although in the last case the decision was overturned by the Court of Appeal in 2013, with the first case discussed in an obiter, illustrating the sensitive character of this issue, the decisions raised much comment in the legal press. In particular the Queen’s Bench April 2013 decision in Yam Seng, accepting good faith as a source of contractual obligations, has drawn the attention of most contract lawyers, in the UK and abroad. Was this the announcement of a new spring, English common law joining its civil law sisters in accepting the good faith principle as the leading standard of conduct in the law of contract? It is perhaps no coincidence that the case was about the sale of fragrances under a distribution contract. A remarkable feature of this new development, at least to a civil law observer, is that among a majority of positive reactions of London solicitor’s firms in their digital Newsletters, discussing the consequences of the Yam Seng decision for legal practice, some firms advised clients to consider the use of a clause explicitly excluding the application of the duty of good faith in future contracts. -
Formation: Offer and Acceptance
Formation: Offer and Acceptance How do we know if a contract exists? Þ Offer and acceptance Þ Consideration Þ Intention to be legally bound Þ Certainty of the contract and its terms Þ Some contracts need to be in a certain form Þ Capacity to enter into contract, e.g. a young person cannot enter into a contract Offer: Intention to contract is unequivocal. Agreement: a consensus (meeting of the minds) amongst all parties aBout the arrangement. There must Be objective evidence of the agreement à Not suBjective, there is no agreement if you don’t say or indicate clear agreement/undertaking. Making a commitment: There is an immediate readiness to Be Bound/undertake obligation/assume responsiBility à e.g. language showing commitment or conduct ----- Invitation to Treat (Invitation to Make Offers) Harvey v Facey [1893] Provision of information, not an offer. Fisher v Bell [1961] Shop window invites offers But is not an offer itself. Only providing an example of things they sell, could Be out of stock which is unfair on the shop. A shop is a place of Bargaining, not of definite sales, and you can haggle about the price (outdated in modern conditions). ‘Snapping-up’ cases Ex. Online shopping at Argos The price + description of a TV set is put on the weBsite £2.99. Customer Bought 200 units, and Argos confirmed payment + delivery. Q: Is the weBsite the same as the shop window? ‘Add to Basket’ = offer, payment confirmation = acceptance One party knows/should have known aBout the other’s mistake. In selling, the customer makes the offer. -
The Three Ages of Utmost Good Faith
4 Th e Th ree Ages of Utmost Good Faith HOWARD BENNETT I. Introduction It is axiomatic that insurance contracts have a diff erent underlying ethos from other contracts, a diff erence that is conveniently and pithily encapsulated by the concept of ‘ utmost good faith ’ . General contract law does not advocate bad faith, but insurance contract law has higher expec- tations. Th e prime manifestation of these expectations lies in the rules that attach to contract negotiation. General contract law requires statements made to be true but aff ords each nego- tiating party a largely free choice as to whether to make any statements. 1 Insurance contract law imposes a duty to speak and equates silence with a false statement. Th e resulting duty of disclosure has understandably attracted considerable attention given the onerous nature of the obligation imposed on the assured and, historically at least, the strictness of the remedies for breach. Until relatively recently, however, comparatively little focus was placed on an underlying, pervasive idea or doctrine of utmost good faith. Th is chapter is concerned with utmost good faith in that broader sense. Th e chapter considers utmost good faith from a chronological perspective, distinguishing three ages in its evolution. Th e fi rst age extends from the earliest reference in insurance contract law to utmost good faith throughout an initial period during which its impact was untrammelled by any statutory intervention. Th e second age is the period of nearly 110 years during which utmost good faith was, in part at least, the subject of sections 17 – 20 of the Marine Insurance Act 1906 as originally draft ed.