Yam Seng and the meaning of ‘good faith’

In its recent decision in Yam Seng Pte Limited v International Trade Corp Ltd, the High Court suggested that in certain circumstances the courts may be willing to find an implied duty of good faith in contractual relationships governed by English law.

Yam Seng, the claimant and a company incorporated in Singapore, claimed damages for breach of contract and misrepresentation against the defendant (International Trade), an English company.

International Trade had contacted Yam Seng in January 2009 inviting negotiations for a distribution agreement, stating that it had ‘recently signed’ a licence agreement relating to the products that it sought to distribute. International Trade had actually only obtained the licence in May 2009. Yam Seng terminated the agreement early citing various breaches by International Trade, including failing to ship orders promptly and refusing to supply certain products after Yam Seng had marketed them…

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