Many parties to construction contracts are unaware that NSW
courts often imply a duty to act in good faith in construction
contracts. Although a duty to act in good faith may be included
expressly, parties need to be aware of how and when a duty to act
in good faith may be implied into construction contracts. Only then
will parties be able to reflect their intentions in their
construction contracts.
The Duty to Act in Good Faith
What is a Duty to Act in Good Faith?
In Renard Constructions (ME) Pty Ltd v Minister for Public
Works (1992) 26 NSWLR 234 (Renard), the NSW
Court of Appeal equated a duty to act in good faith to
reasonableness. However, this was developed further by the High
Court in Paciocco v Australia and New Zealand Banking Group
Limited [2015] FCAFC 50. The High Court interpreted a duty to
act in good faith to mean:
