It is now almost four years from The Yam Seng. The ideas propounded by Mr Justice Leggatt have gained traction. Whilst it may be too early to claim a clear doctrine of an implied duty of good faith in relational contracts, such a principle seems to be in its nascent phase.

English law historically has displayed hostility towards a general concept of good faith in respect of commercial contracts. In The Yam Seng [2013] EWHC 111 [QB], Mr Justice Leggatt criticized this traditional animosity to good faith in contract, and argued that good faith obligations could indeed be implied into relational agreements.

Over the past four years, a number of first instance cases have approached this issue with varying degrees of welcome or scepticism. In 2016, The Yam Seng reasoning has been explicitly approved in a number of cases. In Globe Motors Inc v TRW Lucasvarity Electric Steering Ltd [2016] EWCA Civ 396, the Court of Appeal stated that: "In certain categories of longterm contract, the court may be more willing to imply a duty to co-operate or, in the language used by Leggatt J in Yam Seng PTE v International Trade...a duty of good faith." In the Commercial Court, in National Private Air Transport Services Company (National Air Services) Limited v (1) Creditrade LLP (2) Windrose Aviation Company Ltd [2016] EWHC 2144 (Comm), Mr Justice Blair rejected direct argument that The Yam Seng was not good law. He held that the authority of the decision in The Yam Seng itself was not open to doubt, and that the varying treatment in case law reflected its application to diverse factual scenarios. He referred to The Yam Seng being cited with approval both by the English Court of Appeal and the Singaporean Court of Appeal (The One Suites Pte Ltd v Pacific Motor Credit Pte Ltd [2015] SGCA 21].

The parameters of any implied duty of good faith remain very much in development. The courts are testing the parameters of "relational contracts", comprising contracts between those characterized by a fiduciary relationship and those involving a longterm relationship wherein parties make a substantial commitment. Relational features include high degrees of communication, cooperation and predictable performance, mutual trust, confidence and expectations of loyalty.

Examples of contracts considered relational include: a joint venture to produce training manuals for pilots (Bristol Groundschool v Intelligent Data Capture Ltd [2014] EWCH 2145 (Ch)); an agreement between a police authority and a private contractor for the disposal of cars (D & G Cars Ltd v Essex Police Authority [2015] EWHC 226 (QB)). However, the following contracts were found not to be relational: a long-term aircraft leasing agreement (National Private Air Transport Services); an interim agreement prior to entering into a long term joint venture (Hamsard 3147 v Boots UK Ltd [2013] EWHC 3251 (Pat)).

The concept of implied obligations of good faith in relational contracts is gaining significant ground. The scope of such obligations and the circumstances in which they arise are fertile areas for consideration and exploration by practitioners.

This article first appeared in `Legal Week'.