Agreement To Negotiate In Good Faith
In this case, the parties agreed to negotiate in good faith the cost of modernizing an offshore oil rig. The Court of Appeal held that an express obligation to negotiate in good faith could be enforceable, but in the following circumstances: 54 On fair obligations in European civil codes, cf. Civil Code (Civil Code) No. 242; Civil Codice (Civil Code) (Italy), Art. 1337, 1375; Civil Code (Civil Code) (France), art. See also Quagliato, P.B., „The Duty to Negotiate in Good Faith“ (2008) 50 I.J.L.M.A. 213Google Scholar. It is rare for a court to impose a tacit duty in good faith. Not only for the above reasons, but also for the generally restrictive approach of including conditions in trade agreements. In rare cases, the courts have recognized an unspoken duty that we have outlined below. 90 To the unspoken duties of good faith cf.
Jobern Pty. Ltd. v BreakFree Resort (2008) Aust. Contract R. 90-269, [2007] FCA 1066; Gordon, M., „Discreet Digression: The Recent Evolution of the Implied Duty of Good Faith“ (2007) 19 Bond L.R. 26Google Scholar. But see Bridge, „Does Anglo-Canadian contract law need a doctrine of good faith?“, p. 426; Bridge, M., „Doubting Good Faith“ (2005) 11 N.Z.B.L.Q. 426Google Scholar; Munroe, H., „The `Good Faith` Controversy in Australian Commercial Law: A Survey of the Spectrum of Academic Legal Opinion“ (2009) 28 U.Q.L.R. 161Google Scholar.
24 For the approval of Walford v Miles by the New Zealand Court of Appeal, see Wellington City Council/Body Corporate 51702 (Wellington) [2002] 3 N.Z.L.R. 486. See also Elizabeth Bay Developments Pty Ltd.v Boral Building Services Pty. Ltd. (1995) 36 N.S.W.L.R. 709. On the reluctance of Australian courts to impose a duty to bargain in good faith, see z.B. Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 C.L.R. 45. See also Peden, „Incorporating Terms of Good Faith in Contract Law in Australia,“ 222. 127 See z.B. Peel, „The Status of Agreements,“ 43-47.
On a lender`s implied obligation to negotiate in good faith an extension of a lease agreement, see Empress Towers Ltd v Bank of Nova Scotia [1991] 73 D.L.R. (4.) 400. In that case, the judge noted that honesty, fair trade, loyalty to the intentions of the parties and shared values and standards of conduct underpin certain „relational“ contracts. In these treaties, a degree of trust and cooperation between the parties is necessary, so much so that an implicit doctrine of good faith can be implemented. Some examples of relationship contracts are joint venture agreements and franchise agreements. While this reasoning has sometimes been followed, the rest of the case law seems to have closed the door to the doctrine of good faith thus applied in the future. The main judgment on good faith bargaining obligations in the English legal order is that of the House of Lords of Walford v Miles ([1992] 2 AC 128). In the case, it was a lockout agreement in which the defendants agreed not to deal with third parties with respect to the sale of their business as long as they negotiated with the complainants. In order to justify the cancellation of the benefit of the transaction, the applicants attempted to convince the court to read in this agreement a positive obligation of the defendant to negotiate in good faith the terms of the sale contract.
