Addleshaw Goddard

UK 200 2014 position: 22

Yam Seng Private Ltd v International Trade Corporation Ltd — all in good faith?

The courts have recently considered both implied and express duties of good faith arising under English law. Is this likely to herald a sea change in parties’ contractual obligations? For many years, commentators have noted that there is no general overriding duty of good faith under English law. However, parties may include express obligations of good faith in their contracts.

In the case of Yam Seng Private Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB), the High Court concluded that an implied duty of good faith could arise in a number of contracting relationships outside of those that have traditionally been held to include duties of good faith (such as contracts of employment or contracts involving fiduciary duties). The Yam Seng case was followed relatively quickly by the Court of Appeal decision in Mid Essex Hospital Services NHS Trust v Compass Group UK & Ireland Ltd [2013] EWCA Civ 200, in which the Court of Appeal considered the construction of an express duty of good faith…

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