'Implicit Good Faith' - or Do We Still Need an Implied Term of Good Faith?

Abstract:     
Implied terms of good faith in relation to express contractual rights and discretions have been the focus of recent litigation in England and Australia. These rights and discretions appear in commercial contracts, where consumer legislation is not relevant and the only possible fetter on the exercise of these rights and discretions would be found in common law or equitable doctrines. From the recent cases, the two likely fetters on rights and discretions are good faith and reasonableness. With those two fetters seem to arise two areas of confusion: (a) the meaning of those terms and (b) the method of incorporation. This paper considers those issues and offers 'implicit' good faith as the solution.

Keywords: contract law, good faith, implied terms, reasonableness, discretions, termination rights

JEL Classifications: K10, K12, K30, K41

Accepted Paper Series