In the recent decision of Bundanoon Sandstone Pty Ltd v
Cenric Group Pty Ltd1 (Bundanoon)
the New South Wales Court of Appeal held that a notice to show
cause issued by a principal in the context of a termination regime
in a construction contract was invalid on good faith grounds, with
the consequence that the principal's subsequent termination of
the contract constituted a wrongful repudiation.
Ever since the decision of Priestley JA in Renard
Constructions (ME) Pty Ltd v Minister for Public
Work2 there has been ongoing controversy in the
Australian courts as to the existence and content of a duty of good
faith in the exercise of contractual powers and discretions,
including in respect of the exercise of termination rights such as
termination for convenience.
