Yam Seng Pte Ltd v International Trade Corporation Ltd [2013]

Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] is an English contract law case that explores the principle of good faith in contractual relationships. The case argues for the recognition of a limited form of good faith as an implied contract term under English law.

In 2009, International Trade Corporation (ITC) granted Yam Seng exclusive distribution rights for Manchester United fragrances in parts of the Middle East, Asia, Africa, and Australia. However, in July 2010, Yam Seng was terminated by ITC, alleging repudiation of the agreement. ITC was accused of breaching the implied term of good faith performance by providing false information to Yam Seng.

Leggatt J held that a duty to be honest is part of good faith, and ITC had made a repudiatory breach of contract. The judge acknowledged the traditional English reluctance towards a doctrine of good faith, citing concerns about vagueness, subjectivity, and potential uncertainty. However, the judgment noted that many civil law systems, including those of Germany, France, and Italy, recognise a general principle of good faith.

The judgment highlighted the presence of good faith in EU legislation, such as the Unfair Terms in Consumer Contracts Regulations 1999. It also mentioned the Principles of European Contract Law and the European Commission's proposed Regulation for a Common European Sales Law, both embodying a duty to act in accordance with good faith and fair dealing.

While the judgment did not declare a general obligation of good faith in all commercial contracts under English law, it acknowledged the increasing influence of this principle. The judge suggested that recognising a doctrine of good faith aligns with developments in other common law jurisdictions like the United States, Canada, and Australia.

In Australia, a contractual duty of good faith is well established, and Canadian courts have implied such duties in certain situations. The judgment indicated that New Zealand and Scotland also show inclinations toward recognising a doctrine of good faith.

While the judgment did not establish a broad duty of good faith in all commercial contracts under English law, it suggested the possibility of implying such a duty based on the presumed intention of the parties, following the established methodology for the implication of terms in fact.
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