Data

Date:
08-03-2017
Country:
Ireland
Number:
[2017] IECA 74
Court:
Irish Court of Appeal
Parties:
Flynn v. Breccia

Keywords

SHARE PURCHASE AGREEMENT - BETWEEN TWO IRISH PARTIES - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE DOMESTIC LAW (IRISH LAW)

CONTRACT PERFORMANCE - IN ACCORDANCE WITH TERMS OF CONTRACT - GENERAL PRINCIPLE OF GOOD FAITH NOT PREVAILING OVER TERMS OF CONTRACT - REFERENCE, AMONG OTHERS, TO ART 1.7 UNIDROIT PRINCIPLES - GENERAL PRINCIPLE OF GOOD FAITH NOT YET RECOGNISED BY IRISH COURTS - NOT BECAUSE OF AN OBJECTION TO SUBSTANCE OF SUCH PRINCIPLE BUT BECAUSE OF "COMMON LAW´S PREFERENCE FOR INCREMENTAL, STEP BY STEP CHANCE THROUGH CASE LAW, COUPLED WITH DISTASTE FOR RELIANCE ON OVERARCHING GENERAL PRINCIPLES"

Abstract

The case involved an appeal against a High Court decision prohibiting the respondents’ sale of shares otherwise than in accordance with certain terms of the relevant shareholders’ agreement. The appeal was allowed and the appellants were unsuccessful in their argument that there existed a general principle of good faith (which, they contended, required the shares to be disposed of in accordance with specific provisions of the shareholders’ agreement) in Irish contract law.

In contrasting the common law’s approach of not recognising a standalone duty of good faith in contractual relations, Judge Hogan referred to the duty of good faith and fair dealing set out in the continental civil law codes and Article 1(7) of the UNIDROIT Principles (2010). Judge Hogan made an observation which is insightful in terms of understanding the difficulty of common law jurisdictions like Ireland in embracing the necessarily broad concepts and duties in the principles: ‘The fact that the Irish courts have not yet recognised such a general principle [of good faith] may over time be seen as simply reflecting the common law’s preference for incremental, step by step change through the case-law, coupled with a distaste for reliance on overarching general principles which are not deeply rooted in the continuous, historical fabric of the case-law, rather than an objection per se to the substance of such a principle.’

(cf. R. de Paor in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 163)

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