The Overlap between Dol & Bad Faith

In an earlier post on the Hard Rock Cafe appeal, it was suggested that dol might more properly be categorised as bad faith, or at least a form of bad faith, rather than fraud or dishonesty, and that the examples given by commentators such as Pothier supported such a wider view, as did authorities such as West v Lazard Brothers and Company (Jersey) Limited 1993 JLR 165. It was also suggested that dol may in fact vary in context and in respect of the precise legal relationship involved.

A line of authority in England could possibly now assist in elaborating the ambit of dol and in formulating a helpful definition of bad faith. The difference between Jersey & England is, however, that England has resorted to developing the concept of implied terms, whereas in Jersey (it is argued) “good faith” is already considered essential to the formation of contractual relations; a breach, giving rise to an action under the concept of dol viz. that the contract is void and/ or damages. (Perhaps such differing approaches are comparable to eg the duty to exercise reasonable care that exists as an implied term but also can overlap with the duty that arises in tort.)

The latest English High Court judgement is Bates v Post Office  [2019] EWHC 606 (QB) reported at 

The Bates case applies Yam Seng (referred to in an earlier post) and, at paragraphs 710 & 711, the High Court considers the ambit of what can amount to bad faith: conduct which in the relevant context would be regarded as commercially unacceptable by reasonable and honest people.”  Importantly, the High Court disagreed with Chitty on Contracts and further stated that a finding of dishonesty was not necessary for bad faith to be found.

Perhaps such a definition accurately captures the essence conveyed by the myriad of examples that Pothier and other commentators cite in their works when dealing with objectionable behaviour that is referred to as dol? We know that Le Gros also refers to “good faith” being essential to contracts governed by Jersey law, so we do need to be able to define bad faith.

The judgment of the Court of Appeal of Jersey on the Hard Rock appeal is eagerly awaited on what could be a key decision in the development of Jersey’s contract law, embracing conduct both pre and post contract.