In a development that has sparked interest across legal circles, Jersey’s Royal Court has ruled that there is no generally implied term of good faith in Jersey law contracts. This ruling definitively resolves unsettled questions left open in prior Jersey judgments, including one from the Court of Appeal in the same case, about the possibility of the existence of such a term. Save for limited circumstances, the court has now categorically stated that no such term exists.
The decision comes as a surprise to many due to previous assumptions of good faith being an underlying principle in contract law. The court, however, asserted that such terms would only arise in special conditions; enveloping all contracts under a universal good faith clause was rejected. The judgment marks a clear departure from previously uncertain stances, setting a new precedent for Jersey contract law.
This matter has prominent implications for contractual disputes and their adjudication. It signifies a departure from the commonly accepted practice in other jurisdictions where an implied term of good faith is typically recognized, such as Australia (Burger King Corp. v Hungry Jack’s Pty) and Canada (Bhasin v Hrynew).
This ruling by the Royal Court has considerable impact on how contracts will be interpreted and enforced within the jurisdiction of Jersey. Legal professionals worldwide may need to adjust their practices and expectations around Jersey contracts accordingly.
For a more detailed analysis of the judgment and its implications, you can access the full report here.