Whether or not the elusive “duty to act in good faith” actually exists in commercial contracts is a matter of considerable debate. The courts appear so uncertain in fact, that they explicitly accept the ambiguity and proceed “just in case” on the basis that such a duty does exist.
This occurred in Kosho Pty Ltd & Anor v Trilogy Funds Management Limited  QSC 135. The Queensland Supreme Court acknowledged that there was little guidance around the existence and nature of a duty to act in good faith. And yet the Court proceeded on the assumption that such a duty existed regardless.
Guarantees – is there a requirement for a lender to ensure that a guarantor receives some form of personal benefit from the transaction? And, does a mortgagee’s failure to sell a security property at full value give rise to a caveatable interest?
The Supreme Court of New South Wales confirms that there is nothing improper in lending to an elderly borrower even in circumstances where he obtained no personal benefit from the transaction. We also revisit a decision of the Supreme Court of South Australia which considered the ability of a mortgagor to lodge a caveat to prevent the mortgagee exercising its power of sale.