Good Faith in Australia Law Essay

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Pages: 8


Since the early 1990s, Australian judicial system has experienced a great flux revolving around the notion of good faith in the performance the enforcement of contracts. The leading case Renard Construction (ME) Pty Ltd v Minister for Public Works (Renard) along with Preistly JA’s judgment commenced the controversial introduction of universal obligation of good faith in all contracts. Such introduction was also confronted by the opposing force of the more conservative judgments, such as those of Meagher JA in Renard and Gummow J in Service Station Association v Berg Bennett & Associates Pty Ltd . In order to correctly assess the extent to which the High Court of Australia should recognize that in all contracts, parties
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Undoubtedly, the existing doctrines of gap filling and various duties provide the certainty and consistency our legal system requires.

Moreover, the notion is also incoherent with the classical theory of contract, based on the philosophy of Laissez-faire and the maxim ‘caveat emptor’, that the individual is in the best position to judge their own interest. The emphasis is upon the liberty to create contract is evidently depicted by Jessel MR in Printing and Numerical Registering Co v Sampson

Contracts when entered into freely shall be held sacred and shall be enforced…….you are not lightly to interfere with this freedom of contract

The universal implication of good faith not only interferes with the liberty of forming contracts, it may also lead to an over dependence on the judicial system to imply good faith rather through the careful bargaining of the expressed terms.

The courts should not be too eager to interfere in the commercial conduct of the parties, especially where all the parties are wealthy, experienced, commercial entities able to attend to their own interest.

Large corporations can be presumed to be able to fend for themselves without the need of legal interference, may develop dependence and uncertainty generating unnecessary litigation .

Contrariwise, the already developed principles of law