No implied term of good faith in a loan note instrument
A loan note contained a provision which provided the issuer with the ability to make any amendments to the loan notes. The question arose as to whether amendments had to be made in good faith.
The court refused to imply a term of good faith into the loan note instrument because the overall documentation was extensive and detailed and the court was being "asked to conclude that the parties omitted to include a important term" and although the defendant had a power to modify the loan note, this was not a discretion that involved a choice from a range of options. The discretion was whether or not to exercise a contractual right. The fact a party had a contractual choice did not justify it being subject to a duty of good faith.
If a contractual duty of good faith is intended to apply in the context of a right to amend a loan note, the scope of the obligation should be expressly set out in the contract.
Myers v Kestrel Acquisitions  EWHC 916 (Ch)
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