What it means
Good faith broadly means dealing honestly, fairly, and reasonably, without seeking to undermine the purpose of the agreement. In Australia, there is no settled universal duty of good faith in all contracts, but it is frequently implied into particular contracts and is expressly required in many commercial dealings and dispute-resolution clauses. Good faith does not require a party to sacrifice its own legitimate interests, but it does prevent dishonest or capricious conduct. It also underpins statutory protections like the prohibition on unconscionable conduct.
How it's used
The franchise agreement required both parties to act in good faith, so the franchisor could not cut off supply simply to pressure the franchisee.