No duty to exercise option reasonably or in good faith in engine maintenance agreement

Rebecca Farrell analyses Cathay Pacific Airways Ltd v Lufthansa Technik AG, in which the High Court found that there was no duty of good faith or duty to act reasonably in respect of an option to withdraw engines from a maintenance agreement.

The judgment provides a helpful discussion of the case law concerning the principles of contractual interpretation and implied terms. It also serves as a reminder to practitioners that evidence of statements made in pre-contractual negotiations, including mutual understanding (subject to limited exceptions) are generally inadmissible to assist with the interpretation of a concluded contract.

Click here to read Rebecca's analysis.

This article was first published by Lexis®PSL on 21 July 2020.

Rebecca Farrell is a barrister in our Commercial and Property and Estates teams. She can be contacted by emailing her on rebecca.farrell@3pb.co.uk or her clerk David Fielder on david.fielder@3pb.co.uk or by calling him on 0330 332 2633.