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Excluding Good Faith and Restricting Discretion

‘Fairness has nothing to do with commercial contracts. The parties enter into them in a spirit of competitive co-operation, with a view to serving their own interest. Commercial parties can be most unfair and entirely unreasonable, if they can get away with it’. This robust view was recently expressed, extra-judicially, by Lord Sumption. Although controversial, it represents a traditional approach to commercial contracts that will resonate with many. Yet there appears to have been something of a shift in the commercial contracts which trouble the courts. Lord Goff (as he later became) once remarked that spot contracts on standard terms were the ‘staple diet’ of the Commercial Court. To a large extent that remains true, but there has been a marked increase in commercial litigation concerning what may loosely be termed ‘joint ventures’. Such contracts typically apply over a long period of time and require a degree of co-operation between the parties.