Good Faith In The Law Of Contract

Essay by EssaySwap ContributorUniversity, Bachelor's February 2008

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In the past, in many contractual dealings, has been to the detriment of the weaker party to a contract. This was due to the rigid application of contract law by the courts and its narrow view that all parties entering into a contract are aware of the terms and conditions of the contract that they have entered into. The courts today, have looked to this notion of ?good faith?, a concept that the courts believe is an essential element to be incorporated in all contractual dealings, for fairness and equal bargaining powers. Although, the High Court has never expressly stated, until recently that ?good faith? or ?fairness? is a general principle of Australian contract law, it is suggested that it is now being integrated into contractual dealings and affairs. While Australia has been slow in developing its own model of ?good faith? it is now evident that it has utilised other models of this notion of ?good faith? that has been practiced around the world in other simular legal systems.

Australian courts historically, would generally not interfere with the contracts content as it adopted a view that what was written in the contract, is what the contract meant. The problem arose with this style of assessment, that it created an unequal bargaining power whereby the stronger parties was able to exploit the ?loop holes? in the current law system to the disadvantage of the weaker party.

The courts in Australia eventually allowed fairness and equity to be incorporated into contract as this notion and re-development of ?good faith? has being seen in recent courts decisions. An Example of this is the statement made by Priestley J. suggesting ?the community expects standards of fairness in contract that are wholly consistent with the existence in all contracts of a duty upon the...