Contracts: good faith

by Richard Cumbley and Peter Church, Linklaters LLP

A practice note that examines duties of good faith in English contract law. While English law does not recognise good faith as a general organising principle, this note explores the three distinct ways this concept can affect commercial contracts. First, the note provides guidance on express duties of good faith and analyses how courts interpret their meaning and scope, with examples from different contractual contexts. Second, it considers the duty of rationality (the Braganza duty), which governs the exercise of contractual discretions. Finally, the note explains when good faith will arise as an implied term by reference to the concept of a "relational" contract. This resource provides examples, drafting tips and practical advice when exercising contractual rights.