Good Faith

Don King v. Douglas

- in the context of agreements granting exclusive promotional or licensing rights, the promoter or exclusive licensee impliedly promises to use reasonable efforts to generate profits for the performer of licenser. -King appeared to breach his duty of good faith by not acting in an impartial manner during Douglas's bout with Tyson -Covenant of good faith should require that a promoter who represents rival fighters not interfere in any respect with either fighter's quest inside the ring to obtain a decision in his favor from the fight's judges.

Four Questions when investigating a claim for relief from a violation of good faith

1. Does the agreement allow or confer upon the D a degree of discretion in performance tantamount to a power to deprive the P of a substantial proportion of the agreement's value. 2. If above, does competent evidence indicate that the parties intended by their agreement to make a legally enforceable K 3. assuming an intent to be bound has the D exercise of discretion exceeded the limits of reasonableness 4.is the cause of the damage complained of the D's abused of discretion or does it result from events beyond the control of either party against which the D has no obligation to protect the P.

three distinct categories of an obligation of good faith

1. Those dealing with standards of conduct in contract formation. 2. with termination of at will employment contracts 3. with limits on discretion in contractual performance.

Three Take aways from Good Faith

1.Typically, an issue of good faith is a question of fact at least to the parties intent 2.The good faith rule is a gap filler meant to prevent on party from taking opportunistic advantage of the other party 3. Good faith is more likely to arise in the performance stage.

Good Faith

A party to a K has a duty to avoid doing anything that will injure the ability of the other party to receive the contemplated benefits.

Good Faith

A party to a contract has a duty to avoid doing anything that will injure the ability of the other party to receive the contemplated benefits.

Good Faith

Almost every provision of the Restatement or UCC contains an element of good faith

R2d 205 Duty of Good faith and fair Dealing

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

SchoolCraft v. Ross

The beneficiary of the deed of trust promissory note in the purchase of a house was bound by an implied covenant to exercise her option (invoking foreclosure) reasonably and to claim the award (insurance proceeds) only to the extent her security was impaired. the lender did not have the right ot unilaterally cut off the borrower's right to use the loaned funds unless he can show that his security was impaired.

What does good faith mean?

avoiding opportunistic behavior, which is in turn defined as using a term to get an unbargained for advantage 9usually because of circumstances not contemplated when the K was made.

Centronics v. Genicom

implied duty in three categories of contract cases. Four questions when investigating a claim for relief from a violation of good faith

The obligation of good faith does not override the express terms of the contract

the obligation of good faith should not be used to protect parties from things they should have protected themselves from when they negotiated and drafted the contract.