Spira v Commonwealth Bank of Australia

The appeal concerned the implied term of good faith and fair dealing in a banking contract. The appellant, Spira, alleged that the Commonwealth Bank of Australia (CBA) had threatened to take actions that, if carried out, would constitute a breach of this implied term. The dispute therefore centred on whether these threats amounted to a breach of contract in themselves, even though the threatened actions had not yet occurred. The matter was heard in the Court of Appeal of New South Wales.

The primary legal issue before the court was whether a threat to breach an implied term of good faith and fair dealing in a contract constitutes an actual breach of that contract, or if it is merely an anticipatory breach. The court was required to consider the nature of implied terms and the circumstances under which a party's conduct, including threats, can be considered a breach of contractual obligations.

The Court of Appeal held that a threat to breach an implied term, without more, does not constitute an actual breach of that term. The court reasoned that an implied term of good faith requires parties to act honestly and reasonably in the performance and exercise of their contractual rights and obligations. While a threat to act in bad faith might indicate an intention to breach, it does not, in itself, amount to a breach of the implied term unless the threatened action is actually taken or the threat itself constitutes a repudiation of the contract. In this instance, the court found that the threats made by the CBA did not amount to a repudiation of the contract.

The appeal was dismissed, and Spira was ordered to pay the costs of the Commonwealth Bank of Australia.