PFI may be past its peak, but various cases have come to court in the last few years involving long-term maintenance contracts, including PFIs. Three cases in particular are worth noting. They have featured issues such as whether terms should be implied about co-operation, how “good faith” clauses should be construed, and whether the long-term purposes of the contract should affect its interpretation.

The first case, Mid Essex Hospital Services NHS Trust vs Compass Group UK and Ireland Ltd (t/a Medirest) (2013) involved a seven-year catering and cleaning contract, which had been “cobbled together”, as the court put it, from NHS and PFI precedents. The trust was allowed to impose (or “award”) service points which were, in effect, penalties for poor performance. The court found that the service points due each month were capable of exact calculation, but that the trust had a discretion to impose less. The question then was: in exercising this discretion, was the trust under an implied duty not to act in an arbitrary manner? No, said the court – such a term was not necessary to make the contract work. The trust was free to exercise its discretion.

The courts seem reluctant to imply terms that require the parties to co-operate or to act in good faith. And if such clauses are actually in the contract, courts may restrict their application

The contractor Medirest also wanted to rely on a specific term in the contract requiring the parties to co-operate with each other in good faith. But that clause was very limited, the court said. It did not apply generally, but only to certain matters such as the transmission of information.

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