Jersey: commercial contracts and an implied term of good faith

Judgment was given earlier this month by the Royal Court (Samedi division; Deputy Bailiff Le Cocq and Jurats Nicolle and Ronge) in Hard Rock Ltd v HRCKY Ltd [2018] JRC026. The court returned, once more, to the question of the existence of an implied term of good faith in a commercial contract. It was held that the defendant had no real prospect of success in recovering damages under an alleged implied term of good faith; the plaintiff's application for this part of the counter-claim was therefore summarily dismissed.

There was limited discussion concerning the existence of such an implied term, but the court nevertheless observed that it had not yet been decided definitively whether every Jersey contract contained an implied term of good faith and the extent to which such a term could be removed or obviated by express terms. The court did, however, make this observation (para. 29):

A term of good faith, even were one to exist, cannot it seems to us be used to qualify the general purpose and commercial rationale of an agreement. To act in good faith, expressed as its corollary, must be not to act in bad faith. Could it be said that a party to a commercial contract was acting in bad faith where on the evidence it acceded to some requests from the counter party and did not accede to others for its own commercial reasons? We cannot think that such could amount to bad faith or an absence of good faith in any event."