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Davies, James --- "Why a common law duty of contractual good faith is not required" [2002] CanterLawRw 13; (2002) 8 Canterbury Law Review 529


WHY A COMMON LAW DUTY OF CONTRACTUAL GOOD FAITH IS NOT REQUIRED

James Davies[*]

I. Introduction

Mr Livingstone owned a valuable motor car which Mr Roskilly, a motor car repairer, agreed to repair. The car was stored in Mr Roskilly's premises in an inadequately locked garage and was stolen. A sign on Mr Roskilly's garage wall read: 'All vehicles stored and driven at owners [sic] risk. All care taken: No responsibility'. Justice Thomas found for Mr Livingstone on traditional principles of contract interpretation but noted, in an obiter statement:

[an] overriding principle [that is] found in most legal systems outside the common law world to the effect that in making and carrying out contracts, parties should act in good faith...I would not exclude from our common law the concept that, in general, the parties to a contract must act in good faith in making and carrying out the contract.[1]

Whether or not contracting parties ought to owe each other an implied common law duty of good faith is a subject which has generated judicial and academic debate in this country,[2] Australia,[3] Canada[4] and England.[5] This article considers what a duty of good faith in contractual interaction entails and advances a number of reasons why the duty is neither warranted nor required in New Zealand contract law.

II. What Does an Implied Duty to Act in Good Faith Mean?

At the outset, it is worth noting that it would appear that the proponents of good faith in contract law see it operating as an implied term in all contractual dealings. It would be a common law duty and not an equitable duty.[6] The implication would be independent of the parties' intentions,[7] except that they would normally be free, by using express words, to exclude the implied term[8] and:

recent decisions suggest that the implied duty of good faith and fair dealing ordinarily would not operate so as to restrict decisions and actions, reasonably taken, which are designed to promote the legitimate interests of a party and which are not otherwise in breach of an express contractual term.[9]

The difficulties involved in implying terms in fact and in law have been thoughtfully discussed by Dr Elizabeth Peden in a recent article.[10] The scope of this article is limited to a consideration of a common law duty of good faith during contract performance. Whether contracting parties ought to owe each other a duty during contract negotiation is a difficult question which will not be considered in this article. This question has been considered in detail elsewhere.[11]

Defining fair dealing and good faith is difficult if not impossible.[12] Part of the reason for this is that it is 'a concept which means different things to different people in different moods at different times and in different places...'.[13] It is a true protean phrase.[14] The scope of this doctrine is unclear because it is a broadly based aphorism.[15] The lack of clarity and precision inherent in this doctrine has led some commentators into loose thinking and confusing this doctrine with others.[16] One commentator has suggested that the lack of doctrinal tools with which to express the good faith idea has, in some jurisdictions, lead to a distortion of fiduciary law.[17] The reason why good faith, as a legal proposition, is difficult to define is that its meaning and content cannot be assessed in a factual vacuum. As Justice Wright noted in Asia Pacific Resources Pty Ltd v Forestry Tasmania:

The novel 'good faith' concept... whilst capable of statement with beguiling simplicity can never be a pure question of law...because even its most ardent proponents appear to recognise that 'good faith' is incapable of abstract definition and can only be assessed as being present or absent if the relevant facts are known or are capable of being known....[18]

Not only do different factual situations affect the make-up of good faith but also different types of legal category impose different obligations. For example, different relationships, obligations and expectations arise in pre-contractual negotiations than arise during the actual performance of a contract. Likewise, the relative strength or weakness of a party may well dictate a lower or higher requirement of good faith or fair dealing. A consumer lacking the protection of legal advice in contract formulation and performance may well benefit from a universal theory of good faith, whereas large corporations are not such obvious recipients.[19] Indeed, most cases where good faith has been argued have involved a disadvantaged consumer who has been taken advantage of by an experienced and not entirely honest business entity.

Many other instances of the potentially different content, meanings and applications of good faith could be given. These include whether the parties fall into one of the perennially open categories of fiduciary relationship.[20] The availability of other remedies, or lack thereof, may also be relevant. For example, if a remedy is easily available then tortured arguments about good faith become, to a certain extent, academic.[21] Another potentially confusing aspect to the requirement to act in good faith is its appearance in a number of areas of law each with a distinct body of authority as to its meaning and application.[22] Australian courts[23] have drawn a distinction between procedural and substantive good faith. Likewise their New Zealand counterparts have said that:

[d]uties expressed in terms of fairness are being recognised in other fields of law also, such as immigration. Fairness is a broad and even elastic concept but it is not altogether the worse for that. In relation to persons bound to act judicially fairness requires compliance with the rules of natural justice. In other cases this is not necessarily so. But we do not think that it can be confined to procedure.[24]

On a practical level, the numerous types of relationship (and not merely contractual relationships) which may require a general duty of good faith hint at the many possible definitions of good faith that could usefully be employed. This is a challenge for any proponent of good faith. How can a universal definition of good faith usefully guide parties in, say, a fiduciary relationship and the average consumer buying a new car? Are the differences between these groups too great for a universal theory to apply? Adding more confusion are theoretical considerations. In continental Europe it has been argued that there are 3 main functions of good faith:[25] (i) interpretation; (ii) supplementation, that is the insertion in the contract of duties to be loyal, to protect, to co-operate and to inform; and (iii) correction or limitation, to prevent abuse of right. If New Zealand and Australian common law comes to develop a model of good faith then, no doubt, academic models of this concept will need to be developed. Some models have already been offered. For example, Renard has argued that, in general, the concepts of fair dealing and good faith contain two broad prohibitions. The first is that parties not engage in misleading or deceptive conduct. Secondly, there is a prohibition against unconscionable conduct.[26] This, however, may not be entirely satisfactory. Misleading and deceptive conduct is, in the main in both New Zealand[27] and Australia,[28] a creature of statute. Unconscionable conduct may found an action in equity. The imposition of a requirement to act in good faith or engage in fair dealing would appear to be rooted in the common law.[29] Primarily this is because, as already noted, it is envisaged that good faith would be implied in contracts independent of the parties' intentions although they may be free to modify or negate the duty by express agreement.

Anthony Mason has suggested that the concept embraces no less than three related notions.[30] These are (i) an obligation on the parties to co-operate in achieving the contractual objects (loyalty to the promise itself); (ii) compliance with honest standards of conduct; and (iii) compliance with standards of conduct which are reasonable having regard to the interests of the parties. Practically, for him, good faith means loyalty to the promise and the exclusion of bad faith behaviour. He prefers not to become enmeshed in the American arguments about what good faith means.[31] Some of these American arguments are, to say the least, intriguing. Various North American writers have suggested that good faith imposes an obligation to act altruistically[32] or take account of social solidarity[33] or loyalty.[34] These are, to say the least, radical ideas that do not sit obviously well with the self-interested notions that infuse our law.[35]

Much of the academic and judicial discussion on good faith has recognised that it contains a decided moral element.[36] John Horsley in an article on this topic, suggested that:

[i]n essence, [good faith] asserts a form of co-operative contracting which imposes a restraint on excessive self-interest, and reflects a concern with ethical trading.[37]

Judicial observations have adopted similar language. For example, Lord Kenyon[38] linked the notions of good faith and honesty. Finkelstein J in Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd[39] held that a term of a contract requiring a party to act fairly and in good faith imposes an obligation not to act capriciously. Bingham LJ in Interfoto Library Ltd v Stiletto Ltd said that good faith:

is perhaps most aptly conveyed by such metaphorical colloquialisms as 'playing fair,' 'coming clean' or 'putting one's cards face upwards on the table'. It is in essence a principle of fair and open dealing.[40]

This approach has been criticised. Michael Bridge argued that:

Good faith and fair dealing, it is submitted, is [sic] an imperfect translation of our ethical standard into legal ideology and legal rules. However much it might stimulate research or encourage inquiry into theories underlying contract law, its appropriate home is the university where it can perform these functions without wreaking practical mischief.[41]

Winn LJ in Panchaud Freres SA v Etablissements General Grain Co[42] thought that it required fair conduct. It may be more illuminating to talk of a duty not to act in bad faith.[43] This is usually easier to recognise.[44] Specific examples include telling lies, using illegitimate pressure, exploiting the weakness of others and abusing positions of confidence.[45] Pushing against this increased role for distinctively moral notions in our law is a concern for the law to be relatively certain. For example, in Banque Financiere de la Cite SA v Westgate Insurance Co Ltd, the English Court of Appeal said that:

[i]n the case of commercial contracts, broad concepts of honesty and fair dealing, however laudable, are a somewhat uncertain guide when determining the existence or otherwise of an obligation which may arise even in the absence of any dishonest or unfair intent.[46]

J F O'Connor has devoted a book to a detailed analysis of the historical forces that have been at work on good faith and its role in a number of areas of law. He then proposes the following definition:

[t]he principle of good faith in English law is a fundamental principle derived from the rule pacta sunt servanda, and other legal rules, distinctively and directly related to honesty, fairness and reasonableness, the application of which is determined at a particular time by the standards of honesty, fairness and reasonableness prevailing in the community which are considered appropriate for formulation in new or revised legal rules.[47]

The idea that good faith ought to be judged by reference to the standards of ordinary people was mooted by Powell[48] and taken up and forcefully argued by Roger Brownsword in his seminal article '"Good Faith in Contracts" Revisited'.[49] Brownsword argued that 'it is community's own standards of decency, fairness, and reasonableness that serve as the criterion [sic] of good faith dealing'.

This idea has been refined. Brownsword calls this good faith model a good faith requirement. This:

acts on the standards of fair dealing that are already recognised in a particular contracting context. These standards may or may not yet have crystallised into express terms commonly used, but they nevertheless represent the informal expectations of those who deal in the particular market.[50]

It is worth noting that Brownsword also proposes a good faith regime. This involves standards of fair dealing and co-operation that would be prescribed by the best, that is the most defensible, moral theory. A good example of this are contracts uberrima fides. We are primarily concerned with his good faith requirement and not his good faith regime. Brownsword et al introduced another layer of complexity in a more recent text. The authors in this text argued that' [i]t is commonplace that good faith can be read as having both a subjective sense (requiring honesty in fact) and an objective sense (requiring compliance with standards of fair dealing)'.[51] Leaving these academic differences to one side and drawing on the work of Powell, Brownsword, O'Connor and utterances by various courts,[52] a workable definition of good faith would probably involve standards of honesty, fairness and reasonableness as judged in accordance with the contemporary community standards of the contracting parties. The triumvirate of honesty, fairness and reasonableness finds support with other writers[53] but has also attracted criticism.[54]

III. Why a Common Law Duty of Contractual Good Faith is Not Required

The thrust of the argument advanced in this article is that a general theory of good faith and fair dealing in New Zealand contract law is not needed. There are a number of reasons for this assertion. In brief, these are:[55]

1. Adequate common law, statutory and equitable remedies already exist to aid those sufficiently deserving. Existing remedies can, at times, fail to offer a sufficient remedy. Sharp practices abound in many devious and newfangled guises. But consider, at a general level, developments in a number of discrete areas within even the last 20 years that aid the victims of sharp practices:

(a) A number of recently enacted statutes sufficiently safeguard the interests and rights of consumers. These complement and often supersede a number of common law and equitable remedies available to the recipients of bad faith. For example, for many consumers and small business people who are the victims of, amongst other things, bad faith, the Disputes Tribunal provides a non-legalist, cheap and swift dispute resolution process.[56] The Tribunal may hear matters where the amount disputed does not exceed $7,500.00[57] or $12,000.00 if the parties agree.[58] Many disputes involving consumers and small business people will not involve amounts greater than these. Unlike courts of law, the Tribunal may adopt a quasi-inquisitorial role. It has, for example, the power to seek and receive such evidence and make investigations and inquiries as it thinks fit[59] and may appoint an investigator.[60] The Tribunal is required to determine disputes according to the substantial merits and justice of the case, and in doing has regard to the law but is not bound to give effect to strict legal rights or obligations or to legal forms or technicalities.[61] The Tribunal's fees are relatively low[62] and, generally, legal representation is not permitted.[63] Because the Disputes Tribunal is not bound by the forms and technicalities of law and equity, academic arguments about the appropriateness or otherwise of good faith in the common law need not concern it. The Tribunal is concerned with resolving disputes, having regard to the substantial merits and justice of the case. No doubt, obvious instances of bad faith will not impress Tribunal referees. In general, participants in the Disputes Tribunal process will not be concerned about the existence or otherwise of a common law duty of good faith even if it may be relevant. For many recipients of bad faith, the Disputes Tribunal will provide sufficient and appropriate remedies.

(b) Equity continues to develop. Where Parliament has failed to provide adequate remedies or the common law is inappropriately rigid then recourse can be made to equitable principles to provide justice.[64] The recent expansion of common law and equitable promissory estoppel in Australia may have filled a gap in relation to negotiating parties where, for example, the defendant has induced the plaintiff to assume that he would negotiate in good faith or induced him to incur loss by his conduct.[65] Likewise, the developing case law on the elastic[66] doctrine of unconscionable conduct plugs a significant hole,[67] as does the doctrine of undue influence.[68]

(c) In addition to promissory estoppel and unconscionability, tort law may provide a remedy to a party which suffers loss as a consequence of relying on the other party's negligent misstatement or where the other party commits deceit or fraud.[69] Liability may arise, for example, where one negotiating party assumes responsibility for the correctness of what is said and invites the other to act on the basis of this or intends to induce the other to act on it.[70]

(d) The common law of contract continues to provide redress in discrete areas. An old example of this is the common law rule that courts may relieve parties of the absurd consequences which follow from their agreement.[71] A more recent example is the development of the common law concerning the interpretation of clauses which purport to limit or exclude the liability of a party. Interfoto Library Ltd v Stiletto Ltd[72] is the most recent case in a line of authority which holds that the more unreasonable or onerous a term, the more that a party seeking to rely on it must have done to bring it to the other's attention. Another example is the defence of non estfactum which offers some relief to those who sign a contract or deed believing it to be totally different in character or content from what it in fact is.[73] Likewise, the implied duty not to hamper the other's performance involves duties similar to those mooted by the proponents of good faith.[74]

(e) Finally, the principle of unjust enrichment or restitution now appears to be established as a cause of action in its own right.[75] Notions similar to good faith underpin this cause of action: 'contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience...'.[76] Restitution may also have a role to play where contract negotiations break down after one party to the negotiations has conferred benefits on the other.[77]

These recent developments may well entail that an overarching theory of good faith is not required. Innovative sharp practices can often be accommodated and justice done within existing remedies. So much has been recognised by a proponent of a general theory of good faith who noted that:

[m]any, if not most rules of English contract law, conform with the requirements of good faith and cases which are dealt with in other systems under the rubric of good faith and fair dealing are analysed and resolved in a different way by the English courts, but the outcome is very often the same.[78]

As Sir Thomas Bingham noted in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd,[79] English law can develop piecemeal solutions in response to demonstrated problems of unfairness.

It has been noted[80] that the most momentous implications of the good faith debate lie in the legal-philosophical field. On a theoretical level, it is argued that implying a general duty of good faith into both consumer and commercial contracts will lead to a general loss of certainty in contract law. It is well recognised that a degree of certainty is required in the law.[81] Clearly the law ought to attempt to be just to individuals[82] but this must be balanced against the loss of the equally valuable commodity to other contracting individuals viz certainty in their contractual dealings. Likewise, confining judicial discretion within narrow limits enables the law to be applied consistently, predictably and efficiently.[83] Interestingly, advocates of the incorporation of a general theory of good faith have argued that not having such a theory leads to uncertainty.[84] This is because judges resort to contortions or subterfuges in order to give effect to their sense of justice in particular cases where the law and equity provide none. L'Estrange v Graucob Ltd[85] has been cited as an example of this.[86] That may be so, but if those judges remain true to the law uncertainty will be reduced. As Menzies J said in South Australian Railways Commissioner v Egan: '[c]ourts search for justice but it is justice according to law: it is still true that hard cases tend to make bad law.'[87]

Considerable ink has recently been spilt over this topic in New Zealand. A recent volume of the OtagoLaw Review[88] was devoted to this subject and Justice Thomas, writing ex-judicially, has offered his views.[89]

3. One aspect of the inherent uncertainty of good faith is that it is not at all clear what it means. Relying on Brownsword or Powell's reasonable expectations of members of the relevant contracting party's community will not do. Well-resourced litigants could, no doubt, furnish contradictory evidence of the relevant community's reasonable expectations. The notion is inherently vague and shifting. Moreover, in other areas of law, it is now well recognised that ascertaining what a 'reasonable' decision is: 'involves, of course, a value or normative judgment...'[90] Judicial recognition of the reasonable man as a mere judicial device has been explicit. Lord Radcliffe in Davis Contractors v Fareham Urban District Council said that: 'the fair and reasonable man, who represents after all no more than the anthropomorphic conception of justice, is, and must be, the court itself.’[91]

Likewise, Gummow J in Service Station Association Ltd v Berg Bennett & Associates Pty Ltd recognised that:

[i]nvocation of 'community standards' may be no more than an invention by the judicial branch of government of new heads of 'public policy', something long ago regarded as a risky enterprise. It cannot be less so in the modern administrative state ' shaped by explicitly adopted policies, incorporated in legislation and implemented by a large array of large regulatory agencies'. [92]

4. A number of intrinsic contractual doctrines may also be weakened by a unified theory of good faith. For example, the doctrine that courts ought to respect and enforce the parties' intentions. Implying a requirement that the parties deal with each other in good faith will in the truly bargained for contract go against the parties' intentions. This is because although each side requires something from the other, a true adversarial bargain does not require good faith to extract this. Imposing on them the additional duty of acting in good faith goes against their control of their contracting process. Putting that another way, they intend to set the contractual framework within which their bargain will operate. Imposing good faith operates outside of this framework. A view similar to this was expressed by the Rt Hon Sir Robert Goff who said that:

[w]e [the United Kingdom Commercial Court] are there to help businessmen not to hinder them: we are there to give effect to their transactions, not to frustrate them: we are there to oil the wheels of commerce, not to put a spanner in the works, or even grit in the oil.[93]

5. One facet of this is that it is not at all clear how contracting parties would know how to act in contract negotiation and performance if good faith were required. How would hard-headed business people who are concerned with their own self-interest know how to act in good faith and what, in particular, this required? This may limit the autonomy of the contracting parties.[94] Lord Curriehill's utterance in Gillespie v Russel and Son is worth repeating. His Lordship noted that in many bargains made in business life there is:

a certain degree of cunning, craft, and even deceit, against which, although they may be transgressions of the strict rules of morality, the law does not protect the contracting parties, but leaves them to protect themselves.[95]

This observation may be suited to a time when stricter notions of freedom of contract held sway, but it still carries a certain resonance, especially when the contracting parties are both suitably aided business entities.

6. If indeed New Zealand and other common law jurisdictions are to adopt an implied duty that contracting parties act in good faith, it is not altogether clear that this will fit with judicial utterances and academic comment on the proper mode of common law development. Briefly, new legal categories or causes of action develop by two mechanisms. The first is from established legal categories by the legitimate processes of legal reasoning,[96] that is by analogy, induction and deduction and, secondly, through the judiciary moulding the law to fit contemporary community standards, values and expectations.[97] It is, with respect, suggested that the New Zealand courts that have mooted the introduction of a general theory of good faith have not thus far engaged these mechanisms. Moreover, should they do so then it is doubtful that a general contractual duty of good faith could be developed. First, using the legitimate processes of legal reasoning may not aid the development of the duty. This is because deductive reasoning and reasoning by analogy are unsuitable modes of reasoning to anew general principle of law. The only manner in which a new general principle of law may be reasoned is through inductive reasoning. A good example of this process is the development of the law of negligence.[98] Although space limitations preclude a full discussion of this topic, it is argued that the introduction of an overarching theory of good faith would not be admitted using inductive reasoning because there are insufficient bases of good faith currently operating in our law upon which to induce such a theory. Secondly, it may be considered doubtful that the contemporary community demands a common law duty of contractual good faith. Primarily, this is for the reasons set out in this article.

7. Linked to this concern is the issue of the proper role of the courts in our constitutional system. One facet of the separation of powers doctrine requires, broadly speaking, that Parliament enact laws and that these are independently enforced by the courts. Crudely and simply put, the reason for this is that Parliament is ostensibly concerned with law making and the courts with adjudicating disputes. Parliament, in both this country and other countries with a similar constitutional and judicial tradition to New Zealand, is charged with law making and, in this task, is aided by specialist committees, law reform commissions and other public input mechanisms. The courts operate without these aids. Their primary concern is resolving discrete disputes. The input that courts receive is limited to argument of counsel and, perhaps, the research assistance of a law clerk. Counsel is likewise limited by his or her client's budget and, generally, not permitted to undertake an analysis of the suitability or otherwise of the law. Judges, save in exceptional circumstances, are vicars but not God.[99] As Justice Richardson has noted:

the Court cannot go out looking for work. They do not initiate cases. They take what comes. Politicians and officials may have bright ideas and do something about them right away. We decide only those cases that come before us.[100]

Law reform is not usually a litigant's concern. Submissions by interested parties during the course of a trial are a clumsy way of gauging the appropriateness or otherwise of a proposed amendment to the law. In sum, in our advanced and complex society, broad law making is best left to Parliament.[101] Parliament has not seen fit to impose a general duty of contractual good faith and the courts should not impose such a general duty. This is Parliament's role.

8. Another difficulty involves ascertaining the contracting parties' state of mind. This is important because it is more often than not their reason for action and not the actions themselves which indicate whether a lack of good faith is involved.[102] The standard of good faith imposed on parties is, most probably, the objective reasonable person. But this must be applied to the actual conduct of the parties. We must judge whether they measure up to the community's expectation of good faith. But how do we figure out what their reasons were especially where the parties have not turned their minds to the question? And where the parties have turned their minds to this question, the courts will become involved in a 'judicial trek through a quagmire of mixed motives [which] would be, in my opinion, a dangerous and needless innovation...'[103]

9. Another aspect of this concern involves whose standards ought to be imposed. We have seen that the broadly accepted definition of good faith requires that it be judged by reference to standards in the contracting parties' communities. One simple problem with this idea is that more often than not the two or more parties to a contract will not be from the same community. In these cases, which community standards ought to apply? Livingstone v Roskilly provides a good illustration of this problem. This case involved a car repairer attempting to avoid his liability by relying on an exclusion of liability notice on his garage wall. Should the community of car repairers guide us in determining what is the appropriate good faith standard, or should we rely on the users of their services? This is a fundamental question because different contracting parties, as a general class, will have different views as to what good faith entails. The customers of car repairers may, for example, expect that good faith would entail that car repairers take all reasonable precautions to protect their vehicles and fully explain the effect and extent of their limitation of liability notices during contract negotiations. On the other hand, car repairers, as a general community, may have different views of what good faith entails. Locating good faith within a community is crucial to ascertaining what good faith entails but it is not at all clear which party's community's view of good faith ought to be used.

10. This concern highlights the crudeness of a general theory. If contract law is to do justice to the parties' bargain, it is inappropriate to require a universal duty of good faith in areas as diverse as, say, simple consumer- type transactions and international commodity sales and voyage charter- parties. These are quite different areas of contract law each with distinct cultures and expectations. The content of good faith would presumably differ between them,[104] and in this environment it may be preferable to have different good faith notions depending on the industry, competence of the parties and so on. This is what the present common law, equitable and statutory remedies provide and would appear to be a more sophisticated approach than a universal theory.

11. There is another problem linked to this point. Courts have said that commercial and business entities, while they are protected by a number of statutory, common law and equitable remedies, oughtnottake the benefit of remedies provided for, amongst others, the weak, illiterate and drunk.[105] The primary reason for this distinction is that many business entities have greater opportunity to avail themselves of suitable legal assistance. The protection of the courts is less needed in this environment. Because business entities and private consumers require different levels or types of protection it appears inappropriate to foist a general theory of good faith on all groups. More sophistication is needed than a crude general theory. In addition there are a number of general and industry specific statutes that protect consumers and the naïve as well as consumers. As we have already seen, the courts are wary of extending protection offered to the weak or vulnerable to hard-headed business people.

12. And, finally, assuming that good faith is admitted as a general theory to our contract law, it would appear that this will add to the 'litigation explosion'[106] experienced in North America. The explosion will, most probably, have two manifestations. First, there will be a considerable period where the courts map the duty. Given the range of contractual interaction, this will be a long process. Secondly, some dissatisfied litigants will, no doubt, continue to appeal in the hope of reaching a sympathetic judicial officer. As the Court of Appeal noted in DHL International (NZ) Limited v Richmond Limited:

[at the judicial stage of the construction of the contract] there is still more to be said for leaving cases to be decided straightforwardly on what the parties have bargained for rather than upon analysis, which become progressively more refined, of decisions in other cases leading to inevitable appeals.[107]

One unfortunate consequence of this is, once again, certainty in dealings and contract enforcement. This is something that the law ought not contribute to.[108] Another may be nothing less than the loss of the judicial virtue of impartiality. Lord Patrick Devlin[109] argued that this is vital to the continued respect and authority of the judiciary. Requiring judges to decide which party shall have the benefit of the good faith doctrine in unclear cases may, on Lord Devlin's approach, limit 'impartiality and the appearance of it [which] are supreme judicial virtues'.[110]

Appendix 1

Judicial: Devonport Borough Council v Robbins [1979] 1 NZLR 1, 28ff; Pendergast v AG (1998) 3 NZ ConvC 192,729, 192,732; Allen v Southland Building and Investment Society (1995) 6 TCLR 643, 652: Master Kennedy-Grant described the existence of a duty of good faith and/or fair dealing as, at least, arguable; Kiwi Gold No Liability v Prophecy Mining No Liability (Unreported, Court of Appeal, 18 July 1991) 30/91; 7m (Europe) Ltd v Lateral Nominees Ltd (Unreported, High Court — Auckland, 17 November 1995) CP 444/95; Bilgola Enterprises Ltd v Dymocks [2000] NZCA 113; [2000] 3 NZLR 169, 179; Dymocks Franchise Systems v Bilgola Enterprises (1999) 8 TCLR 612, 652; New Zealand Licensed Rest Homes Association Inc v Midland Regional Health Authority (Unreported, High Court - Hamilton, Hammond J, 15 June 1999) CP34/97; Symphony Group Ltd v Pacific Heritage (Auckland) Development Ltd (Unreported, High Court - Auckland, Paterson J, 17 August 1998) CP362/98; Stanley v Fuji Xerox New Zealand Ltd (Unreported, High Court - Auckland, Elias J, 5 November 1997) CP 479/96; Bobux Marketing Limited v Raynor Marketing Limited [2001] NZCA 348; [2002] 1 NZLR 506.

Academic: Judith Cheyne and Peter Taylor, 'Commercial Good Faith' [2001] New Zealand Law Journal 245; Dame Sian Elias, 'Opening Address to the 10th Annual Journal of Contract Law Conference' (2000) 6 New Zealand Business Law Quarterly 79; Veronica Taylor, 'Contracts with the Lot: Franchises, Good Faith and Contract Regulation' [1997] New Zealand Law Review 459; Justice Thomas, 'An Affirmation of the Fiduciary Principle' [1996] New Zealand Law Journal 405; Professor John Burrows, 'Update on Contract' (Paper presented at the New Zealand Law Society Seminar, October-November 1999) 11; Burrows, Finn and Todd, Law of Contract in New Zealand (2nd ed, 2002).

Appendix II

Judicial: Theiss Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd (2000) 16 Building and Construction Law 130,170; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 268 (Priestley JA); Hughes Aircraft Systems International vAir Services Australia [1997] FCA 558; (1997) 146 ALR 1, 37 (Finn J); Gambotto v WCP Ltd [1995] HCA 12; (1995) 182 CLR 432, 458f (McHugh J); Service Station Association Ltd v Berg Bennett & Associates Pty Ltd [1993] FCA 638; (1993) 117 ALR 393, 406 (Gummow J); Vroon BV v Foster's Brewing [1994] VicRp 53; [1994] 2 VR 32 (Ormiston J); Garry Rogers Motors (Aust) Pty Limited v Subaru (Aust) Pty Limited [1999] FCA 903; (1999) ATPR 41-703; Aiton Australia Pty Limited v Transfield Pty Limited [1999] NSWSC 996; (1999) 153 FLR 236; News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410; Alcatel Australia Limited v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349; Premist Pty Ltd v Turner Corp Ltd (1992) 30 NSWLR 478; Jenkins v NZI [1994] FCA 1358; (1994) 124 ALR 605; Bridgestone Australia Ltd v G AH Engineering Pty Ltd [1997] 2 Qd R 145; Far Horizons Pty Ltd v McDonald's Australia Ltd [2000] VSC 310; Asia Television Ltd v Yau's Entertainment Pty Ltd [2000] FCA 254; Advance Fitness Corp Pty Ltd v Bondi Diggers Memorial & Sporting Club Ltd [1999] NSWSC 264; Dickson Property Management Services Pty Ltd v Centro Property Management (Vic) Pty Ltd [2000] FCA 1742; (2001) 180 ALR 485; Australian Co-operative Foods Ltd v Norco Co-operative Ltd [1999] NSWSC 274; (1999) 46 NSWLR 267; McIntosh v Dylcote Pty Ltd [1999] NSWSC 230; Forklift Engineering Australia Pty Ltd v Powerlift (Nissan) Ltd [2000] VSC 443.

Academic: D Creman, 'Agreements to negotiate in Good Faith' (1996) 3 Commercial Dispute Resolution Journal 61; Ian Renard, 'Fair Dealing and Good Faith' in Cheryl Saunders (ed), Courts of Final Jurisdiction (1996); A F Mason, 'Contract, Good Faith and Equitable Standards in Fair Dealing' (2000) 116 The Law Quarterly Review 66; N Seddon, 'Australian Contract Law: Maelstrom or Measured Mutation?' (1994) 7 Journal of Contract Law 93; Sir Gerard Brennan, 'A Critique of Criticism' [1993] MonashULawRw 9; (1993) 19 Monash University Law Review 213; Mr Justice Priestley, 'Contract — The Burgeoning Maelstrom' (1988) 1 Journal of Contract Law 15; I B Stewart, 'Good Faith in Contractual Performance and in Negotiation' (1988) 72 The Australian Law Journal 370; Sir Anthony Mason in a Foreword to 'Contract: Death or Transfiguration?' (1989) 12 University of New South Wales Law Journal 2-3; Mr Justice Priestley, 'A Guide to a Comparison of Australian and United States Contract Law' [1989] UNSWLawJl 2; (1989) 12 University of New South Wales Law Journal 4 at 23; T R H Cole, 'Law — All in good faith' (1994) 10 Building and Construction Law 18; Stephen Corones, 'Implied good faith and unconscionability in franchises: moving towards relational contract theory' (2000) 28 Australian Business Law Review 462; J M Paterson, 'Duty of good faith: does it have a place in contract law?' (2000) 74 Law Institute Journal 47; Christopher Boge, 'Does the Trade Practices Act impose a duty to negotiate in good faith?' (1998) 6 Trade Practices Law Journal 68; D N Angel, 'Some reflections on privity, consideration, estoppel and good faith' (1992) 66 The Australian Law Journal 484; Phil McCann, 'Implied condition of good faith in contractual performance' [1999] AUConstrLawNlr 79; (1999) 69 Australian Construction Law Newsletter 45; David Ferguson and Julia Bracun, 'Implied condition of good faith in contractual performance' [1999] AUConstrLawNlr 44; (1999) 67 Australian Construction Law Newsletter 12; Emma Moloney, 'Contracts and the concept of good faith' [1993] AUConstrLawNlr 36; (1993) 29 Australian Construction Law Newsletter 32; Dr Peden, 'Incorporating Terms of Good Faith in Contract Law in Australia' [2001] SydLawRw 9; (2001) 23 The Sydney Law Review 222.

Appendix III

Judicial: Martselos Services Ltd v Arctic College (1994) 111 DLR (4th) 65; Gateway Realty Pty v Arton Holdings Ltd (1991) 106 NSR (2d) 180 (SC) (Kelly J); Dudka v Smilestone (1994) 131 NSR (2d) 81 (SC) (Kelly J); Mesa Operating Ltd Partnership v Amoco Canada Resources Ltd (1994) 19 Alta. L. R. (3d) 38 (CA); Opron Construction Co Ltd v Alberta (1994) 151 AR 241 (QB).

Academic: B J Reiter, 'Good Faith in Contracts' (1983) 17 Valparaiso University Law Review 705; S M Williams, 'Good Faith, Unconscionability and Reasonable Expectations' (1995) 9 Journal of Contract Law 55; M Bridge, 'Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith?' (1984) 9 Canadian Business Law Journal 385; Belobaba, 'Good Faith in Canadian Contract Law' in Law Society of Upper Canada, Commercial Law: Recent Developments and Emerging Trends (1985) 73ff; S K O'Byrne, 'Good faith in contractual performance: recent developments' (1995) 74 Canadian Bar Review 70.

Appendix IV

Judicial: Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433, 439, 445 (Bingham LJ and Dillon LJ); Banque Financiere de la Cite SA v Westgate Insurance Co Ltd [1987] 2 All ER 923.

Academic: Lord Justice Staughton, 'Good Faith and Fairness in Commercial Contract Law' 7 Journal of Contract Law 193; Gunther Teubner, 'Legal Irritants: Good Faith in British law or How Unifying Law Ends up in New Divergences' (1998) 61 Modern Law Review 11; Jane Stapleton, 'Good Faith in Private Law' (1999) 52 Current Legal Problems 1; Sir Thomas Bingham, Foreward to Reziya Harrison, Good Faith in Sales (1997) vi; S M Waddams, 'Good faith, unconscionability and reasonable expectations' (1995) 9 Journal of Contract Law 55; J N Adams, 'The economics of good faith in contract' (1995) 8 Journal of Contract Law 126; P S Atiyah, An Introduction to the Law of Contract (5th ed) 212 where the learned author said '[i]t is worth adding a word about an implication which is not made as a matter of course in English law, namely that contractual duties will be performed in good faith'.


[*] James Davies is a commercial solicitor at Anthony Harper Lawyers in Christchurch. This article is taken from his Master of Laws thesis. The author wishes to thank Professor John Burrows for his guidance and comments on various drafts of the author's thesis.

[1] Livingstone v Roskilly [1992] 3 NZLR 230, 237.

[2] See Appendix I.

[3] See Appendix II.

[4] See Appendix III

[5] See Appendix IV.

[6] J W Carter and M P Furmston, 'Good Faith and Fairness in Negotiation of Contract — Part 1' (1994) 8 Journal of Contract Law 1, 7; L J Priestley, 'A Guide to A Comparison of Australian and United States Contract Law' [1989] UNSWLawJl 2; (1989) 12 University of New South Wales Law Journal 4, 23.

[7] See, eg, News Ltd v Australian Rugby Football League Ltd [1996] FCA 1256; (1996) 135 ALR 33, 120 (Burchett J); Garry Rogers Motors (Aust) Pty Limited v Subaru (Aust) Pty Limited [1999] FCA 903; (1999) ATPR 41-703; Breen v Williams (1996) 186 CLR 71.

[8] See Burrows, Finn and Todd, Law of Contract in New Zealand (2nd ed, 2002) para 6.3.3.

[9] South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541,para394 (Finn J).

[10] 'Incorporating Terms of Good Faith in Contract Law in Australia' [2001] SydLawRw 9; (2001) 23 Sydney Law Review 222; see also Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322, 348; Vickery v Waitaki International Limited [1992] 2 NZLR 58, 64 (Cooke P).

[11] Carter and Furmston, above n 6, 1; J W Carter and M P Furmston, 'Good Faith and Fairness in Negotiation of Contract — Part II’ (1994) 8 Journal of Contract Law 93; D Creman, 'Agreements to negotiate in Good Faith' (1996) 3 Commercial Dispute Resolution Journal 61; Jane Edwards, 'Negotiating parties and equitable estoppel: is there a duty of good faith?' (1999) 27 Australian Business Law Review 300; E Farnsworth, 'Pre-contractual Liability and Preliminary Agreements, Fair Dealing and Failed Negotiations' (1987) 87 Columbia Law Review 217; F Kessler and E Fine, 'Culpa in Contrahendo, Bargaining in Good Faith and Freedom of Contract: A Comparative Study' (1964) 77 Harvard Law Review 401.

[12] This is according to one of the proponents of a general theory of good faith, see The Honourable Mr Justice Steyn, The Role of Good Faith and Fair Dealing in Contract Law: A Hair-Shirt Philosophy?' (1991) The Denning Law Journal 131, 140-1.

[13] Bridge, 'Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith?' (1984)9 Canadian Business Law Journal 385, 407. Burrows, Finn and Todd above n 8, para 2.2.6 have expressed similar concerns as have R Brownsword, N Hind and G Howells (eds), Good Faith in Contract Law: Concept and Context (1998) 3.

[14] To borrow from Farnsworth, 'Good Faith Performance and Commercial Reasonableness under the Uniform Commercial Code' (1963) 30 University of Chicago Law Review 666, 668. A similar view is expressed by Hector L MacQueen, 'Good Faith in the Scots Law of Contract: An Undisclosed Principle?' in Angelo D M Forte (ed), Good Faith in Contract and Property Law (1999) 7.

[15] Burrows, Finn and Todd above n 8, para 2.2.6.

[16] Ibid.

[17] Paul Finn, 'Commerce, The Common Law and Morality' [1989] MelbULawRw 5; (1989) 17 Melbourne University Law Review 87, 96.

[18] Unreported, Supreme Court of Tasmania, 4 September 1997. See, also, Aiton Australia Pty Ltd v Transfield Pty Limited [1999] NSWSC 996; (1999) 153 FLR 236, 260 (Einstein J).

[19] Kirby P in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, 585 noted that 'courts should be careful to conserve relief so that they do not, in commercial matters, substitute lawyerly conscience for the hard-headed decisions of business people'.

[20] Lac Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4th) 14, 61 (Sopinka J); R Meagher, W Gummow and J Lehane, Equity, Doctrines and Remedies (3rd ed, 1992).

[21] 21 See, eg, Livingstone v Roskilly [1992] 3 NZLR 230.

[22] Service Station Association Ltd v Berg Bennett & Associates Pty Ltd [1993] FCA 638; (1993) 117 ALR 393, 401 (Gummow J).

[23] At least concerning administrative decisions: Kioa v West [1985] HCA 81; (1997) 159 CLR 550, 584 (Mason J).

[24] Canterbury Pipes Lines Limited v Christchurch Drainage Board [1979] 2 NZLR 347, 352 (Woodhouse and Cooke JJ).

[25] Martign Hesselink, 'Good Faith' in A Hartkamp et al (eds), Towards a European Civil Code (2nd ed, 1998).

[26] Ian Renard, 'Fair Dealing and Good Faith' in Cheryl Saunders (ed), Courts of Final Jurisdiction (1996) 65.

[27] Fair Trading Act 1986 (NZ) s 9.

[28] Trade Practices Act 1974 (Cth) s 52, ff.

[29] Carter and Furmston, above n 6, 7.

[30] A F Mason, 'Contract, Good Faith and Equitable Standards in Fair Dealing' (2000) 116 Law Quarterly Review 66, 69.

[31] Ibid.

[32] Duncan Kennedy, 'Form and Substance in Private Law Adjudication' (1976) 89 Harvard Law Review 1685, 1721.

[33] RM Unger, Law in Modern Society (1976) 206ff. Nili Cohen, 'Pre-Contractual Duties: Two Freedoms and the Contract to Negotiates' in J Beatson and D Friedmann (eds), Good Faith and Fault in Contract Law (1995).

[34] Fried, Contracts as Promise: a theory of contractual obligation (1981) 85.

[35] So much was recognised by Lucke in 'The Common Law as Arbitral Law: A Defence of Judicial Law Making' [1983] AdelLawRw 1; (1982) 8 Adelaide Law Review 229, 261; 'Good Faith and Contractual Performance' in P D Finn (ed), Essays on Contract (1987) 155, 162.

[36] See, eg, Ewan McKendrick 'Good Faith: A Matter of Principle?' in Angelo D M Forte (ed), Good Faith in Contract and Property Law (1999) 39, 59; Roger Brownsword, 'Positive, Negative, Neutral: the Reception of Good Faith in English Contract Law' in Roger Brownsword et al (eds), Good Faith in Contract (1999) 14; P Finn, above n 17, 92; Carter and Furmston, above n 6, who suggest that good faith involves having regard to the legitimate interests of the other party; Paul Finn, 'Contract and the Fiduciary Principle' [1989] UNSWLawJl 5; (1989) 12 University of New South Wales Law Journal 76, 82-3 who suggests that it curtails the right to act self-interestedly.

[37] 'Contractual good faith, classical foundations and judicial intervention' (Paper presented at the 53rd Annual Conference of the Australisian Law Teachers Association, Dunedin, 6-8 July 1998) 121.

[38] Mellish v Motteux (1792) 170 ER 113, 113-4.

[39] (1999) FCA 903, para 37.

[40] [1989] 1 QB 433, 439.

[41] 'Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith?' (1984) 9 Canadian Business Law Journal 385, 412.

[42] [1970] 1 Lloyds Rep 53, 59.

[43] Robert Summers '"Good Faith" in General Contract Law and the Sales Provisions of the Uniform Commercial Code' (1968) 54 Virginia Law Review 195.

[44] P S Atiyah, An Introduction to the Law of Contract (5th ed, 1995) 212.

[45] Ewan McKendrick 'Good Faith: A Matter of Principle?' in Angelo D M Forte (ed), Good Faith in Contract and Property Law (1999) 39, 42.

[46] (Unreported, 28 July 1988). See also, White and Carter (Councils) Ltd v McGregor [1961] UKHL 5; [1962] AC 413.

[47] Good Faith in English Law (1990) 102.

[48] 'Good Faith in Contracts' (1956) 9 Current Legal Problems 16, 23.

[49] (1996) 49 Current Legal Problems 120.

[50] '"Good Faith in Contracts" Revisited' (1996) 49 Current Legal Problems 111; 'Positive, Negative, Neutral: the Reception of Good Faith in English Contract Law' in Roger Brownsword et al (ed), Good Faith in Contract (1999) 33.

[51] R Brownsword, N Hind and G Howells, above n 13, 4.

[52] The appeal to community standards of honesty, reasonableness or fairness in defining good faith has found support in Canada. See, Gateway Realty Ltd v Arton Holdings Ltd (No 3) (1991) 106 NSR (2d) 180.

[53] H K Lucke, 'Good Faith and Contractual Performance' in P D Finn (ed), Essays on Contract (1987) 155, 161; John Wightman, 'Good Faith and Pluralism in the Law of Contract' Roger Brownsword et al (eds), Good Faith in Contract (1999) 41. The Honourable Mr Justice Steyn, 'The Role of Good Faith and Fair Dealing in Contract Law: A Hair-Shirt Philosophy?' (1991) The Denning Law Journal 131 also favours the reasonable person approach. However, he is of the view that good faith does not involve a moral element: 140-1.

[54] See J Stapleton, 'Good Faith in Private Law' (1999) 52 Current Legal Problems 1, 5-7 for a compelling critique of those who equate reasonableness with good faith.

[55] Unfortunately space does not allow full argument on all of the following issues to be offered.

[56] See, generally, Geraint Howells, 'The Modern Character of Consumer Protection Laws: Some First Thoughts' (1999) 5 New Zealand Business Law Quarterly 149.

[57] Disputes Tribunals Act 1988 (NZ) s 10.

[58] Disputes Tribunals Act 1988 (NZ) s 13.

[59] Disputes Tribunals Act 1988 (NZ) s 40.

[60] Disputes Tribunals Act 1988 (NZ) s 41.

[61] Disputes Tribunals Act 1988 (NZ) s 18(6).

[62] Clause 3 of the Disputes Tribunals Amendment Rules 2001 provides that $30 is payable at the time of lodgement of a claim where the total amount in respect of which an order of a Tribunal is sought under the claim is less than $1,000, $50 is payable at the time of lodgement of a claim where the total amount in respect of which an order of a Tribunal is sought under the claim is $1,000 or more but less than $5,000, and $100 is payable at the time of lodgement of a claim where if the total amount in respect of which an order of a Tribunal is sought under the claim is $5,000 or more.

[63] Disputes Tribunals Act 1988 (NZ) s 38(2).

[64] A F Mason, 'Contract, Good Faith and Equitable Standards in Fair Dealing' (2000) 116 Law Quarterly Review 66, 83.

[65] Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406; Foran v Wight [1989] HCA 51; (1989) 168 CLR 385.

[66] To borrow Sir Robin Cooke's expression in 'The New Zealand National Legal Identity' (1987) 3 Canterbury Law Review 171, 177.

[67] Commercial Bank of Australia Limited v Amadio [1983] HCA 14; (1983) 151 CLR 447; Bowkett v Action Finance Ltd [1992] 1 NZLR 449, 460 (Tipping J); Nichols v Jessup [1986] NZCA 84; [1986] 1 NZLR 226.

[68] Wilkinson v ASB Bank Ltd [1998] 1 NZLR 674; Racz v Miliszewski (Unreported, 4 April 1996) CP 293/93.

[69] Carter and Furmston, above n11, 94. See also, F Kessler and E Fine, 'Culpa in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study' (1964) 77 Harvard Law Review 401; Esso Petroleum Co Ltd v Mardon [1976] EWCA Civ 4; [1976] QB 801.

[70] San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [1986] HCA 68; (1988) 162 CLR 340, 357 (Gibbs CJ and Mason, Wilson and Dawson JJ).

[71] Wilkie v Bethune (1848) 11D 132.

[72] [1989] 1 QB 433.

[73] Landzeal Group Ltd v Kyne [1990] NZHC 181; [1990] 3 NZLR 574; Chiswick Investments Ltd v Pevats [1990] 1 sNZLR 169;Bradley West Solicitors Nominee CoLtdvKeeman [1994] 2 NZLR 111.

[74] Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596; Butt v McDonald [1896] 7 QLJ 68.

[75] Slowey v Lodder (1901) 20 NZLR 321 noted by Sir Robin Cooke, (1992) The Law Quarterly Review 334, 336. Although contrast the observations of Deane and Dawson JJ in Stern v McArthur [1988] HCA 51; (1988) 62 ALJR 588, 604; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 62 ALJR 508, 537ff (Gaudron J). See also, Ross Grantham and Charles Rickett, Enrichment and Restitution in New Zealand (2000) 4, they say that '[t]he superior courts of all the major Commonwealth jurisdictions have now accepted that it is the principle of unjust enrichment which underlies and unites the specific instances of restitutionary responses, outside the fields of contract, torts and property'. See also, Lord Goff of Chieveley and Gareth Jones, The Law of Restitution (1998).

[76] Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662, 673 (Mason CJ, Wilson, Deane, Toohey and Gaudron JJ).

[77] British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504; Brenner v First Artists' Management Pty Ltd [1993] VicRp 71; [1993] 2 VR 221; Carter and Furmston, above n 11, 94, 103; A Wyvill, 'Enrichment, Restitution and the Collapsed Negotiations Cases' (1993) 11 Australian Bar Review 93.

[78] Ewan McKendrick, 'Good Faith: A Matter of Principle?' in Angelo D M Forte (ed), Good Faith in Contract and Property Law (1999) 39, 41.

[79] [1989] 1 QB 433, 439.

[80] H K Lucke, 'Good Faith and Contractual Performance' in P D Finn (ed), Essays on Contract (1987) 155, 168.

[81] See, eg, Sir Ivor Richardson, 'What Can Commercial Lawyers Expect of a Legal System?' (1998) New Zealand Business Law Quarterly 128; David Goddard, 'Security of Contract: Why it Matters and What That Means' (2000) 6 New Zealand Business Law Quarterly 82.

[82] See, eg, Sir Robin Cooke, The New Zealand Legal Identity' (1983) 3 Canterbury Law Review 171.

[83] John Smillie, 'Certainty and Civil Obligation' [2000] OtaLawRw 4; (2000) 9(4) Otago Law Review 633, 651.

[84] Powell and Robert Summers, '"Good Faith" in General Contract Law and the Sales Provisions of the Uniform Commercial Code' (1968) 54 Virginia Law Review 195.

[85] [1934] 2 KB 394.

[86] By, amongst others, Raphael Powell, 'Good Faith in Contracts' (1956) 9 Current Legal Problems 17, 26.

[87] [1973] HCA 5; (1973) 130 CLR 506, 512.

[88] Volume 9, Number 4, 2000.

[89] 'A Return to Principle in Judicial Reasoning and an Acclamation of Judicial Autonomy' (1993) 23 Victoria University of Wellington Law Review, Monograph 5; 'An Affirmation of the Fiduciary Principle' [1996] New Zealand Law Journal 405; 'Judging in the Twenty-First Century' [2000] New Zealand Law Journal 228.

[90] To borrow from administrative law, Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125, 167 (Mahoney J); Liversidge v Anderson [1941] UKHL 1; [1942] AC 206 (Atkin L); Mark Aronson and Bruce Dyer, Judicial Review of Administrative Decisions (1996) 95.

[91] [1956] UKHL 3; [1956] 2 All ER 145, 160.

[92] [1993] FCA 638; (1993) 117 ALR 393 at 405, quoting Gunningham, "Public Choice: The Economic Analysis of Public Law", [1992] FedLawRw 4; (1992) 21 Federal Law Review 117

[93] 'Commercial contracts and the Commercial Court' (1984) Lloyd's Maritime and Commercial Law Quarterly 382, 391.

[94] S M Williams, 'Good Faith, Unconscionability and Reasonable Expectations' (1995) 9 Journal of Contract Law 55; See also the Court of Appeal decision in DHL International (NZ) Limited v Richmond Limited [1993] 3 NZLR 10, 17.

[95] (1859) 21 Dunl Ct of Sess 13.

[96] Alastair MacAdam and John Pkye, Judicial Reasoning and the Doctrine of Precedent in Australia (1998) and the considerable authority cited there; J McHugh, 'The Law-Making Function of the Judicial Process — Part I' (1988) 62 Australian Law Journal 15; CJ Mason, 'Changing the Law in a Changing Society' (1993) 67 Australian Law Journal 568; CJ Brennan, 'A Critique of Criticism' [1993] MonashULawRw 9; (1993) 19 Monash University Law Review 213; M D Kirby, 'A F Mason - From Trigwell to Teoh' [1996] MelbULawRw 20; (1997) 20 Melbourne University Law Review 1087; Mr Justice Thomas, 'Judging in the twenty-first century' (2000) New Zealand Law Journal 228; AM Gleeson, 'Clarity or Fairness: Which is more important?' [1990] SydLawRw 1; (1990) 12 The Sydney Law Review 305.

[97] Alastair MacAdam and John Pkye, Judicial Reasoning and the Doctrine of Precedent in Australia (1998) and the considerable authority cited there; Sir Robin Cooke, 'Fairness' (1989) 19 Victoria University of Wellington Law Review 421; Ronald Dworkin, Taking Rights Seriously (1977); Ronald Dworkin, 'Hard Cases' (1975) 88 Harvard Law Review 1057; Justice Michael McHugh, The Law-making Function of the Judicial Process' (1988) 62 The Australian Law Journal 15; Mr Justice Thomas, 'Fairness and Certainty in Adjudication: Formalism v Substantialism' [1999] OtaLawRw 3; (1999) 9(3) Otago Law Review 459, 469; I L M Richardson, 'The role of judges as policy makers' (1985) 15 Victoria University of Wellington Law Review 47; Mr Justice Thomas, 'A Return to Principle in Judicial Reasoning and an Acclamation of Judicial Principle' (1993) 23 Victoria University of Wellington Law Review, Monograph 5; Mr Justice Thomas, 'Fairness and Certainty in Adjudication: Formalism v Substantialism' [1999] OtaLawRw 3; (1999) 9(3) Otago Law Review 459.

[98] In particular, Heaven v Pender (1881-5) All ER Rep 35; Fletcher v Rylands [1865] EngR 436; (1866) LR 1 Exch 265 affirmed on appeal [1865] EngR 436; (1868) LR 3 HL 330; Home Office v Dorset Yacht Co Ltd [1970] UKHL 2; [1970] 2 All ER 294; Donoghue v Stevenson [1932] AC 562.

[99] To borrow Professor Peter Walker's analogy from The judge as casual law-maker' (Paper presented at the New Zealand Legal Method Conference, 2 March 2001) 12.

[100] 'The Role of an Appellate Judge' [1981] OtaLawRw 1; (1981) 5 Otago Law Review 1, 6.

[101] The reform of the rule in Searle v Wallbank [1947] AC 341 is a good example of this process at work. See also, State Government Insurance Commission v Trigwell [1979] HCA 40; (1979) 142 CLR 617, 633 Mason J said that '[t]he court is neither a legislature nor a law reform agency'. Somewhat ironically given his activist approach to judging, Lord Denning argued that judges could not legislate as that was parliament's proper role, see 'The Need for a New Equity' (1952) 5 Current Legal Problems 1.

[102] Steven J Burton, 'Breach of Contract and the Common Law Duty to Perform in Good Faith' (1980-1) 94 Harvard Law Review 369.

[103] Champtaloup v Thomas [1976] 2 NSWLR 264, 271: Glass JA discussing a proposed extension of fiduciary relationships.

[104] Michael Bridge, 'Good Faith in Commercial Contracts' in Roger Brownsword et al (eds) Good Faith in Contract (1999) 139.

[105] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 concerning the reach of the fiduciary principle. See also, Qantas Airways Ltd v Dillingham Corporation [1987] ACL 35-692, where Rogers J observed, where deciding a case between an international construction company and an international airline, that '[t]he emphasis on the wealth and standing of the defendants and their ready access to the best of advice is to displace the operation of concepts of unconscionable conduct which underlie decisions such as Commercial Bank of Australia v Amadio [which concerned unconscionable conduct]...For a successful and wealthy international conglomerate to appeal to the safeguards the law provides for the elderly, the illiterate and the financially oppressed is to move into a totally inappropriate field of discourse'.

[106] R A Posner, The Federal Courts: Crisis and Reform, (1985). For an Australian perspective on this see, Kirby P (as he then was) in 'The Future of the Judiciary' (1978) 3 Canterbury Law Review 184, 192.

[107] [1993] 3 NZLR 10, 17.

[108] Sir Ivor Richardson, 'What Can Commercial Lawyers Expect of a Legal System?' (1998) New Zealand Business Law Quarterly 128, 129.

[109] 'Judges and Lawmakers' (1976) 39 The Modern Law Review 1, 3-4.

[110] Ibid 4.


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