Briefing: Good faith obligations in NEC contracts

Many employers and contractors, as signatories to NEC contracts, and adjudicators misconstrue the importance and the effect of core clause 10.1, being of the misconception that this core clause, in so far as it relates to 'a spirit of mutual trust' is merely an expression of good intent, without any binding effect. This paper analyses the meaning of the words 'a spirit of mutual trust' and discusses the scope of the obligation, which core clause 10.1 imposes on the parties to the NEC contract. It identifies the clause as a manifestation by the parties of an intention to create a legal relationship of trust with regard to the contractual rights and assets of one another; it equates the resultant fiduciary duties of the parties to those of a trustee of a trust, which are more onerous than a bare duty to act in good faith.