Good faith and the duty to co-operate in long-term contracts

Abstract

This chapter considers the role of good faith, and in particular, the duty to co-operate in long-term contracts. The position in English law, the UN Convention on the International Sale of Goods 1980 (CISG), the UNIDROIT Principles of International Commercial Contracts (PICC), and the Draft Common Frame of Reference (DCFR) are examined. Infamously English law does not have a general principle of good faith. Good faith obligations may be implied into so-called relational contracts. The chapter sets out the characteristics used by the English courts to identify such contracts and scrutinizes the content and extent of such obligations. While there is no express obligation on parties to act in accordance with good faith under the CISG, on many occasions tribunals have found the parties to have good faith duties to one another. The bases for these findings are considered, as well as the content of the express good faith obligations found in the PICC and DCFR. Despite the lack of a general good faith obligation in English law, it is often chosen as the law to govern international commercial contracts. It is argued that introducing good faith obligations by way of implied terms may mean that English law loses its competitive advantage on the global stage.