If your business has worked with another company for years, you might expect a certain level of trust between you. But if that relationship breaks down, does the law require both parties to continue acting fairly towards each other?
A recent High Court decision involving Virgin Media and network services provider Svella Connect provides useful guidance on when a duty of good faith can be implied into a commercial contract, and why the wording of your contract matters.
What does “good faith” mean?
In simple terms, acting in good faith can involve being honest with the other party, co-operating where appropriate and not deliberately taking steps to undermine the purpose of an agreement.
For example, if a supplier discovers a problem that could seriously affect its ability to deliver under a long-term contract, acting in good faith might involve being open about the issue and working with the customer to find a solution.
However, not every difficult or unfair commercial decision amounts to a breach of good faith. There is no general duty of good faith automatically attached to every commercial contract.
That’s where the concept of a “relational contract” comes in.
What is a relational contract?
A relational contract is generally a long-term agreement where the parties are expected to work together over an extended period, often involving regular communication, co-operation and a degree of mutual trust.
Svella Connect provided network services to Virgin Media under three framework agreements. Svella argued that the agreements were relational contracts and that this meant wider duties of good faith should be implied.
In other words, Svella argued that the nature of their long-standing relationship meant the parties should be required to act honestly and avoid frustrating the purpose of their agreements.
The High Court rejected that argument.
What did the court decide?
The court confirmed that simply describing a contract as “relational” does not automatically create a general duty of good faith.
The starting point is what the parties have actually agreed in their contract.
In this case, the agreements were detailed commercial contracts and already included an express obligation to act in a spirit of mutual trust and co-operation. They also allowed Virgin Media to use alternative contractors, did not guarantee Svella any particular amount of work and gave Virgin Media rights to terminate the arrangements.
The court therefore found there was no gap in the agreements which made it necessary to imply the wider good-faith obligations Svella was seeking.
The court also rejected the argument that a duty of good faith should be implied simply because the agreements were relational.
Why does this matter when writing a commercial contract?
This case is a useful reminder not to rely on assumptions about how a commercial relationship will work.
If something is particularly important to your business, it is worth considering whether it should be clearly included in the contract rather than relying on an expectation that the other party will behave in a particular way.
This is particularly relevant when entering into long-term commercial relationships where your business may become heavily reliant on another party.
The more comprehensively a commercial contract sets out the parties’ rights and obligations, the harder it may be to establish later that there is a gap requiring an implied term.
The purpose of implying a term is to fill a genuine gap in a contract, rather than to rewrite the agreement the parties have already made.
What can businesses take from this case?
A strong business relationship isn’t necessarily the same as a legally protected obligation to act in good faith.
Trust and co-operation may be important parts of a commercial relationship, but businesses should think carefully about what they actually need the other party to do and whether those obligations are clearly reflected in the contract.
Svella Connect Ltd v Virgin Media Ltd [2026] EWHC 2223 (TCC) is a useful reminder that when a commercial relationship comes under pressure, the wording of the contract can matter far more than the assumptions that have grown around the relationship.
If you’re entering into or reviewing a commercial contract, taking advice at the outset can help ensure the agreement clearly reflects what your business needs and expects from the relationship.
Our team are here to help
When a commercial relationship starts to break down, disagreements about what the contract means or what each party is required to do can quickly become difficult to resolve.
Our commercial contract disputes solicitors can advise businesses on contractual disagreements, including disputes over contractual obligations, interpretation of agreements and the rights and responsibilities of each party.
If you’re facing a dispute over a commercial contract, we’re here to help you understand your position and the options available to you.
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Disclaimer
The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional. The contents of this blog refers to the process in England and Wales.
This blog was written by Aaron Singh Bahia, Trainee Solicitor, in our Dispute Resolution team.