The Joint Contracts Tribunal’s (JCT) new 2024 Design and Build Contract introduces mandatory ‘good faith’ provisions.
- These provisions now require collaborative working and sustainable development as essential components.
- Courts interpret ‘good faith’ contextually, emphasising honesty and reasonable commercial behaviour.
- Case law, including Compound Photonics, highlights the limits and expectations of ‘good faith’ within contracts.
- Article 3 is now prominently featured to reinforce its importance in contractual agreements.
With the advent of the JCT Design and Build Contract 2024, the principle of ‘good faith’ has been given a mandatory status, setting a forward-thinking precedent in contractual obligations. This shift reflects a broader commitment to collaborative working and sustainable development, hallmarks of modern construction practices. Initially an optional clause, Article 3, encapsulating these commitments, has been elevated to a central component of the contract, underscoring its newfound significance.
The courts have long held that the interpretation of ‘good faith’ rests heavily on contextual factors. As elucidated in the case of Re Compound Photonics Group Ltd [2022] EWCA Civ 137, the essence of this principle lies in honest dealings and the prohibition of commercially unacceptable conduct. However, it is noteworthy that English courts exercise caution in extending this duty, ensuring it does not impose unintended obligations or alter the intrinsic nature of the contract.
The interpretation of Article 3 may draw parallels with the New Engineering Contract’s Core Clause 10, which advocates for mutual trust and co-operation among contracting parties. The ruling in Van Oord UK Limited v Dragados [2021] underscores this, where it was determined that a duty exists to act in concert with contractual stipulations, especially regarding trust and cooperation.
In further exemplifying the application of ‘good faith’, the case of Costain Ltd v Tarmac Holdings Ltd [2017] indicates a duty for transparent communication concerning critical contractual aspects, such as time constraints in adjudication clauses. The imperative here is clear communication aligned with genuine cooperative spirit.
Nevertheless, the JCT’s inclusion of Article 3 and other related clauses does not dismantle existing legal rights or responsibilities inherent in the contract. It reinforces a well-established framework, providing clarity without offering loopholes for reinterpretation. The longevity and efficacy of these provisions, while currently speculative, lean towards minimal disruption, given historical judicial reluctance to overextend ‘good faith’ beyond its established purview.
The JCT 2024 affirms the importance of ‘good faith’, enhancing clarity and collaboration in construction contracts.
