One topic in which there is a potential for misunderstanding is in relation to the circumstances in which, in a contract governed by English law, there will be a duty to act in good faith. This is an issue that has been discussed in many court judgments in recent years and has been the subject of much extra-judicial writing by members of the senior judiciary both in England and in other jurisdictions coupled with substantial commentary from academics. Against this backdrop, the FMLC established a Working Group to consider duties of good faith in wholesale financial contracts.
The traditional view of English law is that the scope of the duty of good faith is narrow and of limited application to the conduct of business in the wholesale financial markets. The purpose of this paper is to discuss in the light of recent case law the nature and extent of the duty in the context of wholesale financial contracts. It is intended to assist the markets and practitioners in dispelling uncertainty and misunderstanding.
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