Joint ventures and an implied duty of good faith

Al Nehayan v Kent

Cases where arguments founded on an implied obligation of good faith rarely succeed but this is an example where such an argument was successful on the facts.


The parties entered into a joint venture but it was not the subject of a formal written agreement. In October 2008 Al Nehayan entered into an oral contract to invest in Mr Kent’s hotel business, known as Aquis, as an equal shareholder. Their joint venture was later expanded in 2010 to include an online travel business called YouTravel.

Over the next few years, the businesses started to experience financial difficulties and Al Nehayan contributed, at the request of Mr Kent, further financial support in the form of loans and share capital. By early April 2012, it was decided that Al Nehayan should not support the businesses any longer and should separate his interest from that of Mr Kent's. A scheme was devised to restructure the companies and repay Al Nehayan's capital contribution. Following a series of meetings and correspondence, which included alleged physical threats of violence, Mr Kent entered into two agreements to implement this scheme (Agreements).

When repayment was not forthcoming Al Nehayan issued proceedings. Kent then advanced a counterclaim that as part of their joint venture Al Nehayan owed Kent a contractual duty to act in good faith and that but for breaches of this (and other) duties Kent would not have entered into the Agreements.


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