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ETHICS IN THE TENDER PROCESS: IMPLIED DUTY OF GOOD FAITH AND REMEDIES FOR BREACH

International Construction Law Review

ETHICS IN THE TENDER PROCESS: IMPLIED DUTY OF GOOD FAITH AND REMEDIES FOR BREACH Mathias Cheung* Fundamentem autem est iustitiae fides, id est dictorum, conventorumque constantia et veritas ‘The foundation of justice, moreover, is good faith – That is, truth and fidelity to promises and agreements.’ (Cicero, De officiis, 1, VII–23) INTRODUCTION The principle of good faith in contract law, by which one refers to a spectrum of obligations ranging from bona fide pre-contractual negotiations to honesty and reasonableness in exercising contractual discretions, is nothing less than an emotive subject across civilian and common law jurisdictions alike. Whilst the rest of the common law world has gradually warmed up to the idea of good faith as the “ general organising principle of the common law of contract ”, 1 English law has held fast to the deeply entrenched scepticism towards a general doctrine of good faith, 2 giving precedence generally to the quasi-dogmatic principle of freedom of contract – “ the general principle of English law that parties are free to contract as they may think fit ”, especially in the commercial context. 3 Back in 1991, Lord Steyn already observed (extra-judicially) that England is “ a somewhat infertile soil for the development of a generalised duty of good faith in the performance of contracts ”. 4 The question for us English lawyers is: is this continuing hostility to a general unifying * LLB (Hons), BCL, barrister at Atkin Chambers, Lincoln’s Inn, London. 1 Bhasin v Hrynew [2014] 3 SCR 494 (Supreme Court of Canada) paragraph 33 (Cromwell J). See also: in Australia, Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 and Burger King Corporation v Hungry Jack’s Pty Ltd (2001) 69 NSWLR 55 (NSW Court of Appeal) and Alstom Ltd v Yokogawa Australia Pty Ltd [2012] SASC 49 (South Australia Supreme Court); in the US, section 205 of Restatement (Second) of Contracts (1985) and section 1-304 of the Uniform Commercial Code (2011). 2 With the notable exception of Leggatt J’s decisions in Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB); [2013] BLR 147 ; [2013] 1 Lloyd’s Rep 526 ; [2013] 1 All ER (Comm) 1321; 146 Con LR 39 and MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2015] EWHC 283 (Comm); [2015] 1 Lloyd’s Rep 359 . 3 Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale (HL) [1967] 1 AC 361; [1966] 1 Lloyd’s Rep 529 ; [1966] 2 All ER 61 at paragraph 399 (Lord Reid); see also e.g., Photo Production Ltd v Securicor Transport Ltd (HL) [1980] UKHL 2; [1980] AC 827; [1980] 1 Lloyd’s Rep 545 ; [1980] 2 WLR 283; [1980] 1 All ER 556 at paragraph 848 (Lord Diplock); Homburg Houtimport BV v Agrosin Private Ltd (“The Starsin”) (HL) [2003] UKHL 12; [2004] 1 AC 715; [2003] 1 Lloyd’s Rep 571 ; [2003] 1 WLR 2853; [2003] 2 All ER 785 at paragraph 57 (Lord Bingham). 4 Lord Steyn, “The Role of Good Faith and Fair Dealing in Contract Law: A Hair-Shirt Philosophy?” (1991) Denning Law Journal 131, 132. Pt 3] Ethics in the Tender Process 243

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