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Legal Issues In Accounting Duty Of Good Faith

3144 words - 13 pages

Part I'...However, current law stops well short of imposing a duty to negotiate in good faith. Rather, these developments would appear to favor the acceptance of a duty not to negotiate in bad faith. Further, the application of equitable estoppel in appropriate situations would appear to be an appropriate mechanism for the basis of developing a good faith doctrine. ' --Jane Edwards'Once one uses the external standard of reasonableness the reference to honest men adds little.' --Johan SteynEnglish law generally involves 'adopting an external standard given life by using the concept of the reasonable man' . The commercial advantage of this approach as Johan Steyn seen is that it 'promotes certainty and predictability in the resolution of contractual disputes' . My paper is going to cite the case 'Waltons v Maher'(1988) to examine how this approach is actually in accordance with the legal principle of 'good faith', in other words how this principle endeavors to ensure the reasonable expectations of the contractual parties being satisfied.The simple facts regarding the case 'Waltons v Maher (1988) are: two parties were negotiating the lease of Maher's land to Waltons, an agreement was reached and a contract had been drawn up and signed by Maher. Waltons had, via their laywers, indicated that the contracts were either exchanged or about to be exchanged. Walton, however, then withdrew from the negotiation. By that stage, Maher completed almost half of the construction. The majority of decision in 'Waltons v Maher (1988) by the High Court was based on the modern doctrine of estoppel.As the Court of Appeal pointed out, estoppel requires a promise to have been made by the person against whom estoppel is alleged. There must also be an existing relationship between the promisor and the promisee. In this case, referring to the critical conversation took place between lawyers from two parties on 7 November, the parties had already agreed on the terms of lease and rent, a binding legal relationship was formed accordingly. The detailed terms of Dawson Waldron's letter of 7 November together with the appellant's failure to communicate any refusal on amendments justified the defendant to assume that there was a binding contract.High Courts decided that an equitable estoppel had been created because Waltons were estopped from denying the existence of a contract as it led the Maher to believe that a binding contract exited and was thus estopped from denying the existence that contract . The decision enhanced the rights of a person by significantly widen the scope of the application of estoppel, the doctrine of equitable estoppel can no longer to be applied only to cases where binding contractual relationship exist, it can also be applied to both non-contractual promises and pre-contractual negotiations .Next let's have a look under what circumstance 'good faith' can or should intervene in this case. The duty of good faith as Finkelstein J once described is intended...

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