Maggbury Pty Ltd & Anor v Hafele Aust Pty Ltd

Maggbury Pty Ltd and another party (the appellants) appealed to the High Court of Australia against a decision of the Full Federal Court concerning a dispute with Hafele Aust Pty Ltd (the respondent). The core of the disagreement related to the respondent's alleged breach of an implied term of good faith and fair dealing in a distributorship agreement. The appellants contended that the respondent had acted in bad faith by terminating the agreement and subsequently competing with them.

The High Court was required to determine whether Australian contract law recognises an implied term of good faith and fair dealing in commercial contracts, and if so, whether the respondent's conduct in terminating the distributorship agreement and engaging in competitive activities constituted a breach of such an implied term. The Court also considered the scope and application of any such implied term in the context of the specific agreement and the parties' conduct.

The majority of the High Court held that, in the absence of express statutory provision or clear indication to the contrary, Australian contract law does not imply a universal term of good faith and fair dealing into all commercial contracts. Their Honours reasoned that while parties are expected to act honestly and not to mislead or deceive, imposing a broad implied duty of good faith would unduly interfere with contractual freedom and certainty. The Court distinguished this from specific implied terms that might arise in particular circumstances, such as in insurance contracts or where a party has a discretion to exercise. The appeal was therefore dismissed.