by Prof Laura Macgregor, Chair of Scots Law, Edinburgh Law School*

At the time of writing, the Scottish courts have not yet had the opportunity fully to consider the English implied term of contractual good faith (in Unicorn Tower Ltd v HSBC Bank plc [2018] CSOH 30 [72], Lady Wolffe held that there was no need to adjudicate on the parties’ submissions on this question). This is not surprising: the flow of Scottish reported cases is relatively small, and (Unicorn aside) no case has been reported in which a Scottish court has been asked to apply the relevant English precedents.

Whether a Scottish court would be obliged to apply those English precedents in the context of a suitable case is a difficult question. The law of implied terms in English and Scots contract law is similar, and English precedents are routinely cited and applied in the Scottish courts. That is not the case, however, with contractual good faith. Scots law contains a native, albeit nascent and under-developed, idea of contractual good faith. In a House of Lords case from 2004 Lord Hope stated: “Good faith in Scottish contract law […] is generally an underlying principle of an explanatory and legitimating rather than an active or creative nature” (R v Immigration Officer at Prague Airport, ex parte European Roma Rights Centre [2004] UKHL 55, [2005] 2 AC 1, [60]). More recently, the Inner House of the Court of Session reasserted the existence of good faith without expanding on its source or nature (Van Oord UK Ltd v Dragados UK Ltd [2021] CSIH 50).