An Appeal Against A Judgment Holding

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Introduction This case is an appeal against a judgment holding that both parties to a substantial commercial contact were entitled to terminate by reason of the conduct of the other party. The Court of Appeal (CA) held that the High Court was wrong in implying a general obligation on the parties to a long-term contract to co-operate in good faith. They stated that there is no such duty which applies generally in English Law. As a consequence, the respondent was not entitled to terminate the contract as a result of the appellant 's conduct and I agree with the outcome, as the judgement was reasonably balanced. Background In 2008, Medirest entered into a contract with the NHS Trust for the provision of catering and cleaning services in two…show more content…
In addition, Medirest failed to report service failures or monitor performance for the first few months. The Trust began its own monitoring and allocated service failure points, and calculated deductions, in a manner which Cranston J in the High Court described as "patently absurd". Good Faith and Implied Intention While the High Court sought to broaden the interpretation of good faith obligations within contracts, the CA has reversed that position. LJ Jackson found that there was no implied term that prevented a client exercising a contractual discretion in an arbitrary fashion where the contract made no requirement that the discretion must be exercised in the interests of both parties. LJ Jackson further acknowledged that where an element of discretion is bestowed upon one party, it is subject to a good faith requirement that the party will not act in an arbitrary, irrational or capricious manner.12 Nevertheless; he found that such a requirement of good faith could not be implied into the contract and both LJ Beatson and LJ Lewison agreed. The Court of Appeal’s narrow interpretation of the good faith obligation and refusal to imply any wider good faith doctrine means that England, unlike the USA, Australia and most civil law systems, continues not to have a general duty of good faith implied into contracts. This judgment makes clear that interpretation
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