The duty of 'good faith' in franchise agreements: The latest English court decisions

28 November 2014

English franchise lawyers have generally been of the view that there is no implied obligation of good faith in a franchise relationship. However, a landmark 2013 High Court judgment held that 'good faith' in the sense of honesty should be implied into commercial agreements which are relationship-based and which require ongoing communication and cooperation between the parties. This principle was first tested in a franchising context in a recent case, which led some commentators to conclude that the principle does not apply to franchising relationships. The author argues however that a standard of good faith is taking shape under English commercial contract law and that it will apply, but only in the right case and on the right facts.

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