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Maritime Law in Motion pp 115–130Cite as

Good Faith in Maritime Law Contracts

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Part of the book series: WMU Studies in Maritime Affairs ((WMUSTUD,volume 8))

Abstract

In academic and professional circles, discomfort and distrust remain visible around the application of good faith in contracts. However, the flow of time has shown judicial inclination towards such application in order to arrive at just outcomes. Given the backdrop of good faith as a legal principle and the scattered treatment of it across various jurisdictions, it is interesting to note its relevance in maritime contracts. The chapter discusses how application of this phenomenon impacts ascertainment of liabilities and quantum of damages through case law, and if at all, parties are required to adopt good faith expressly in particular reference to maritime contracts.

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Notes

  1. 1.

    Cicero, De Officiis, http://penelope.uchicago.edu/Thayer/E/Roman/Texts/Cicero/de_Officiis/1B∗.html.

  2. 2.

    https://plato.stanford.edu/entries/kant-moral/#GooWilMorWorDut.

  3. 3.

    Colombo (2012), pp. 23–59.

  4. 4.

    https://www.researchgate.net/publication/318012840_Good_Faith.

  5. 5.

    Ahmed (2010).

  6. 6.

    Davies (2002).

  7. 7.

    TSG Building Services PLC v South Anglia Housing Limited [2013] EWCH 1151 the High Court found that no good faith obligation applied to an exercise of the right to terminate set out in the contract. The High Court considered that the contractual requirement that the parties “act reasonably” and “work together individually and in the spirit of trust, fairness and mutual cooperation” did not provide a basis for implying a duty of good faith.

  8. 8.

    Kessler and Fine (1964).

  9. 9.

    Ibid.

  10. 10.

    Colombo (2012), p. 24.

  11. 11.

    Lorrenzo (2014).

  12. 12.

    Art. 1112, French Civil Code.

  13. 13.

    Art. 1104, French Civil Code.

  14. 14.

    Rowan (2017).

  15. 15.

    Ibid.

  16. 16.

    Dillion CJ in Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd. [1989] 1 QB 433.

  17. 17.

    Burton (1994), pp. 126–156.

  18. 18.

    Ibid.

  19. 19.

    Summers (1968), pp. 195–267.

  20. 20.

    “That is, it was not appropriately formulable in terms of some general positive meaning-through the specification of a set of necessary and sufficient conditions, for example; rather, it functioned as an excluder to rule out a wide range of heterogeneous forms of bad faith”, Summers (1968), pp. 195–267.

  21. 21.

    RESTATEMENT (SECOND) OF CONTRACTS § 205 (1981). Also see The Restatement (Second) of Contracts (Restatement) states that, “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement,”. The Uniform Commercial Code’s (U.C.C.; the Code) general definition of good faith encompasses both “honesty in fact and the observance of reasonable commercial standards of fair dealing.”

  22. 22.

    Practice view interpreted good faith more contextually, aligned with the expectations of the parties.

  23. 23.

    See Burton (1994), pp. 1533–1564.

  24. 24.

    264 Md. 446 (1972), 287 A.2d 270.

  25. 25.

    Burton (1994), p. 1534.

  26. 26.

    Ibid.

  27. 27.

    See Rawlings, 151 Ariz. at 154, 726 P.2d at 570.

  28. 28.

    (1992) 26 NSWLR 234.

  29. 29.

    (1977) 180 CLR 266.

  30. 30.

    Baron (2002), pp. 54–81.

  31. 31.

    Capuano (2005), pp. 29–48.

  32. 32.

    [2000] FCA 1541.

  33. 33.

    Capuano (2005), p. 31.

  34. 34.

    [1746] E. R. 89.

  35. 35.

    http://pryan2.kingsfaculty.ca/pryan/assets/File/Watterson_2008_on_Carter_v_Boehm_1766.pdf.

  36. 36.

    Black King Shipping Corporation and Wayang (Panama) S.A. v. Mark Ranald Massie [1985] 1 Lloyd’s Rep. 437 (The Litsion Pride).

  37. 37.

    Steyn (1991), pp. 131–141.

  38. 38.

    Walford v. Miles [1992] 2 A.C. 128.

  39. 39.

    Ibid.

  40. 40.

    Ibid.

  41. 41.

    Hunter (1992), pp. 172–174.

  42. 42.

    English law had not reached the stage where it was ready to recognise a requirement of good faith as a duty implied by law, even as a default rule, into all commercial contracts. Nevertheless, there was no difficulty, following the established methodology of English law for the implication of terms in fact, in implying such a duty in an ordinary commercial contract based on the presumed intention of the parties. The modern case law on the construction of contracts emphasised the contracts were made against a background of unstated shared understandings which informed their meaning.

  43. 43.

    See Yamseng, [2013] EWHC 111 (QB), in so far as English law may be less willing than some other legal systems to interpret the duty of good faith as requiring openness as “playing fair” “coming clean” or “putting one’s cards face upwards on the table”, this should be seen as a difference of opinion, which may reflect different cultural norms, about what constitutes good faith and fair dealing in some contractual contexts rather than a refusal to recognise that good faith and fair dealing are required, para 151.

  44. 44.

    See Steyn (1991), para 152.

  45. 45.

    [1993] 1 Lloyd’s Rep 397, 404.

  46. 46.

    Fullton Shipping Inc of Panama v. Globalia Business Travel Sau (Formerly Travelplan Sau) of Spain (The New Flamenco) [2017] UKSC 43.

  47. 47.

    [1998] 2 Lloyd’s Rep 39.

  48. 48.

    Ibid.

  49. 49.

    [2013] EWCA Civ 200, [2013] All ER (D) 200 (Mar).

  50. 50.

    https://www.newlawjournal.co.uk/content/good-faith-0.

  51. 51.

    [2006] EWCA Civ 1038.

  52. 52.

    Ibid.

  53. 53.

    Emirates Trading Agency LLC v. Prime Mineral Exports Private Ltd. [2014] EWHC 2104 (Comm).

  54. 54.

    Chaplin v. Hicks, ALL ER Rep 224.

  55. 55.

    Itex Shipping Pte Ltd v. China Ocean Shipping Co. [1989] [Q.B. (Com.Ct).

  56. 56.

    [2009] NSWCA 177 (3 July 2009).

  57. 57.

    Abbott Labs v. Baxter Int’l Inc., 315 F.3d 829, 834 (7th Cir. 2003).

  58. 58.

    https://caselaw.findlaw.com/us-7th-circuit/1361842.html.

  59. 59.

    Cremades (2012), pp. 761–789.

  60. 60.

    Berkeley Community Villages Ltd v. Pullen [2007] EWHC 1330 (Ch).

  61. 61.

    “German law rarely seeks to find a gap in the contract to be settled by means of constructive interpretation. Since judges in Germany feel obliged to refer to a statutory text, they often invoke § 242 BGB, which requires them—when deciding what is due from the party rendering performance—to apply the same standard as they apply under § 157 BGB when interpreting a contract, namely the standard of good faith and proper commercial practice”, See, Kotz Hein, ‘European Contract Law’, p. 236. Also see Cehave N.V. v. Bremer Handelsgesellschaft m.b.H. (The Hansa Nord).

  62. 62.

    [2009] 1 AC 61 (HL).

  63. 63.

    Hadley v. Baxendale, [1854] EWHC J70.

  64. 64.

    The question was whether future contingencies (Gulf war in this case) should be taken account by the court in assessing damages where a contract is terminated for an accepted repudiatory breach. [2007] 2 Lloyds Rep 164.

  65. 65.

    BV [2015] UKSC 43.

References

Cases

  • Abbot Labs v. Baxter Int’l Inc., 315 F.3d 829, 834 (7th Cir. 2003)

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  • Abu Dhabi National Tanker C.o v Product Star Shipping Ltd. (No.2), [1993] 1 Lloyd’s Rep 397

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  • Aegean Sea Traders Corporation v. Repsol Petroleo SA and Another (The “Aegean Sea”), [1998] 2 Lloyd’s Rep 39

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  • Berkeley Community Villages Ltd v. Pullen [2007] EWHC 1330 (Ch)

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  • Black King Shipping Corporation and Wayang (Panama) S.A. v. Mark Ranald Massie [1985] 1 Lloyd’s Rep. 437 (The Litsion Pride)

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  • BP Refinery (Westernport) Pty Ltd v. Hastings Shire Council, (1977) 180 CLR 266

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  • Bunge SA v. Nidera, BV [2015] UKSC 43

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  • Carter v. Boehm, [1746] E. R. 89

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  • Cehave N.V. v. Bremer Handelsgesellschaft m.b.H. (The Hansa Nord)

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  • Chaplin v. Hicks, ALL ER Rep 224

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  • Dorsey Bros. v. Anderson, 264 Md. 446 (1972), 287 A.2d 270

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  • Emirates Trading Agency LLC v. Prime Mineral Exports Private Ltd. [2014] EWHC 2104 (Comm)

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  • Fullton Shipping Inc of Panama v. Globalia Business Travel Sau (Formerly Travelplan Sau) of Spain (The New Flamenco) [2017] UKSC 43

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  • Hadley v. Baxendale, [1854] EWHC J70

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  • Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd. [1989] 1 QB 433

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  • Itex Shipping Pte Ltd v. China Ocean Shipping Co. [1989] [Q.B. (Com.Ct)

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  • Mid-Essex Hospital Services NHS Trust v. Compass Group UK and Ireland Ltd. [2013] EWCA Civ 200, [2013] All ER (D) 200 (Mar)

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  • Petromec Inc. v. Petroleo Brasileiro, [2006] EWCA Civ 1038

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  • Rawlings, 151 Ariz. at 154, 726 P.2d

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  • Renard Constructions (ME) Pty Ltd v. Minister for Public Works, (1992) 26 NSWLR 234

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  • South Sydney District Rugby League Football Club Ltd. v. News Ltd, [2000] FCA 1541

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  • The Achilleas, [2009] 1 AC 61 (HL)

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  • TSG Building Services PLC v. South Anglia Housing Limited [2013] EWCH 1151

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  • United Group Rail Services v. Rail Corporation New South Wales, [2009] NSWCA 177

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  • Walford v. Miles [1992] 2 A.C. 128

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  • Yamseng, [2013] EWHC 111 (QB)

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Author information

Authors and Affiliations

  1. Swiss Singapore Overseas Pte Ltd, Aditya Birla Group, Singapore, Singapore

    Shatarupa Choudhury

  2. National Law University Odisha, Bhubaneswar, Odisha, India

    Pallab Das

Authors
  1. Shatarupa Choudhury
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  2. Pallab Das
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Correspondence to Pallab Das .

Editor information

Editors and Affiliations

  1. Faculty of Law, Dalian Maritime University, Dalian, China

    Proshanto K. Mukherjee

  2. Maritime Law and Policy, World Maritime University, Malmö, Sweden

    Maximo Q. Mejia Jr.

  3. Plymouth Business School, University of Plymouth, Plymouth, UK

    Jingjing Xu

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Choudhury, S., Das, P. (2020). Good Faith in Maritime Law Contracts. In: Mukherjee, P.K., Mejia, M.Q., Xu, J. (eds) Maritime Law in Motion. WMU Studies in Maritime Affairs, vol 8. Springer, Cham. https://doi.org/10.1007/978-3-030-31749-2_7

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