Good Faith

Good Faith

Parties involved in a dispute governed by the Franchising Code of Conduct are under an over-riding obligation to act in good faith in relation to their dealings with each other.

The ACCC explains that “good faith requires parties to an agreement to exercise their powers reasonably and not arbitrarily or for some irrelevant purpose. Certain conduct may lack good faith if one party acts dishonestly, or fails to have regard to the legitimate interests of the other party.”

Australian courts have found business dealings to be not in good faith when they involve one party acting for some ulterior motive, or in a way that undermines or denies the other party the benefits of a contractual relationship.