Topic > Good Faith Case Study - 847

The dispute arises from a contract for the disposition of the appellant's vehicle. The issue was to resolve the fact that the defendant terminated the contract for breach of the repudiator thus excluding him from the tender process, when the claimant dealt with the vehicle without their consent, then the court must decide whether the defendant acted in bad faith . . In approaching the case, Dove J considered the length of the contractual relationship, the number of transactions and the substance of the contract. He therefore held that good faith requires an act of mutual trust between the parties and any act that is inconsistent with the parties' common purpose of a long-term relationship would be sufficient to constitute a breach. His Honor Justice then recognized that there had been breaches not only of the express terms of the contract, but also of the implied terms of the duty of good faith. Satisfying the reasonable person test, Dove J held that the plaintiff's gross misconduct had led to the termination of the contract and subsequent exclusion from the tender, therefore, there was no bad faith in the defendant's conduct. He then referred to Leggatt J in the Yam Seng case and argued that in interpreting the terms of the contract, the court should take into account the context of the individual case and decide what it would reasonably and objectively mean. Accordingly, the court went on to point out that several contract terms are highly sensitive to the context of the contract and therefore warrant the implied duty of good faith. Another sensitive issue is also involved in this case, as D&G has entered into a contract to deal with the repossessed property of a member of the public; it was a serious mistake