High Court Implies a Duty of Good Faith into English Law Distribution Agreement

December 4, 2013

Earlier this year, the High Court ruled that a duty of good faith may be implicit in long-term relational contracts, such as joint venture agreements, franchise agreements and long-term distribution agreements. The ruling creates risks as well as opportunities for parties to such contracts. Parties contemplating entering into such contracts should consider appropriate provisions to manage the risks. For example, the laws of certain other jurisdictions are very different to English law in this regard, as illustrated by a recent decision of the Delaware Supreme Court. So, the choice of law could be very important.