GOOD FAITH AND FIDUCIARY OBLIGATIONS IN ALLIANCE CONTRACTS
JESSICA TWOMBLEY, SOLICITOR, SENIOR LECTURER IN LAW
Centre of Construction Law and Dispute Resolution,
Kings College London
Email: [email protected]
This paper discusses good faith clauses in alliance contracts and other forms of “relational contracts”, arguing that relational contract theory has begun to feed into the wider legal consciousness and that relational contracts are now being recognised and analysed within context by the courts in accordance with Macneil’s relational method. It is proposed that good faith in a relational contract leads to a wider definitional discretion which is enhanced by contextual analysis. Under this analysis, it is argued that good faith obligations may lead to fiduciary obligations. It concludes by examining what this might mean for the contracting parties.
This paper draws on academic and judicial commentary within the sphere of private law and more specifically, construction law, to posit that alliance contracts are “relational” and considers what conclusions may be drawn from this identification. The proposal is that, as relational contracts, alliance contracts engender new forms of normative contractual behaviour which are then open to relational methods of analysis now being employed by courts in many common law jurisdictions. 1 It is proposed here that the traditional approach of commercial self-interest evinced by contracting parties is inimical to the collaborative organisation of alliancing contracts 2 and, further, that these two supposedly opposing positions may be
1 Relational contract theory is considered by Feinman who examines how Macneil’s work brought to light the importance of considering relational contracts–extensive, long-term relationships-as a distinctive form of contracting. Relational contracts, like sales contracts, can be governed by the core principles of contracts, as long as the courts applying the principles are sensitive to the factual differences in context …” Feinman, J M, “Relational Contract Theory in Context”, Macneil Symposium, Northwestern University Law Review , Vol 94, No 3, pages 739 to 740.
2 Publicly available alliancing contracts include: PPC2000 (Amended 2013) – Standard Form of Contract for Project Partnering ISBN: 978-1-901171-43-3, FAC-1, – Framework Alliance Contract – ACA, June 2016, ISBN: 978-1-901171-45-7, NEC4: Alliance Contract (Thomas Telford, 19 June 2018).
Pt 4] Good Faith and Fiduciary Obligations in Alliance Contracts