Application for summary judgment in respect of an agreement relating to the proposed redevelopment of the site of the embassy of the United States of America in Grosvenor Square.
Held: The court considered the authorities and principles to be applied when considering an implied term of trust and confidence. In certain categories of contract, specifically contracts of employment, there may be such an implied term implied by law as an incident of all such contracts. However such a term should not be implied here: ‘Accordingly, Malik v Bank of Credit and Commerce International SA [1998] AC 20 is authority for the proposition that there may be implied by law as an incident of all contracts of a certain description (in that case, contracts of employment) mutual obligations that each party will not conduct itself in such a way as, assessed objectively, is likely to destroy or seriously damage the trust and confidence that is required if their relationship is to continue in the manner that the contract implicitly envisages.
In my judgment, that is a far cry from the implied term for which Mr Choo-Choy contends in the present case, which (a) does not relate to a class of contract in respect of which any such implication has previously been recognised in any decided case to which I have been referred, (b) does not depend upon one party conducting itself in breach of an implied promissory obligation, and (c) would give rise to a right to terminate the contract not on the basis of any objective criteria but instead on the subjective basis that the other party genuinely considers that trust and confidence has broken down. In this regard, in argument Mr Choo-Choy made clear that the test for which he contended was that loss of trust and confidence had to be genuine or honest, but did not have to be reasonable.’
Many of the arguments advanced in support of the alleged implied term could be made in relation to the implication of a duty of the utmost good faith, but that outside those categories of contract where such a duty was implied as a matter of law, such as insurance contracts, the courts would not imply such a duty: ‘although a duty of good faith is implied by law as an incident of certain categories of contract (including contracts of employment), the general rule in commercial contracts is that ‘If the parties wish to impose such a duty they must do so expressly’ . . I consider that the case is stronger still for saying that if the parties wish to produce the result that each of them has the right to terminate the contract in the event that it loses trust and confidence in the other, even when the other party is not in breach of contract and if that may be unreasonable, then they should do expressly.’
Richard Spearman QC
[2015] EWHC 1322 (Ch)
Bailii
England and Wales
Citing:
Cited – Malik v Bank of Credit and Commerce International (BCCI); Mahmud v Bank of Credit and Commerce International HL 12-Jun-1997
Allowance of Stigma Damages
The employees claimed damages, saying that the way in which their employer had behaved during their employment had led to continuing losses, ‘stigma damages’ after the termination.
Held: It is an implied term of any contract of employment that . .
Cited by:
Cited – Mr H TV Ltd v ITV2 Ltd ComC 8-Oct-2015
The claimant had contracted with the defendant for the production of a series of reality TV shows featuring celebrities. After severe personal clashes between the people involved on the claimants side, the contract was terminated. The claim was that . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 30 December 2021; Ref: scu.546844