The Implied Obligations of Good Faith

Morin v. Baystone (Aluminium Uniform Finish Case)

A contractor's work was rejected due to a provision in the construction contract stating that all matters relating to "artistic effect" were subject to the final approval of the owner. Car company hires builder to construct a factory addition with the same mill-finish as the rest of the factory, subject the final approval of the company or one of its agents. The car company didn't like the addition, so they hired another company to replace it. That company's addition had the same undesired aesthetic problem, but the agent didn't reject it. This suggests that the agent rejected the original addition in bad faith. Also, satisfaction is judged by a reasonable person standard - unreasonable to approve the second if rejected the first.

Locke v Warner Bros Inc (Clint Eastwood Case)

Ex-wife entered into a non-exclusive first look deal with a production company, thanks to her ex-husband. The production company never hired her or developed her projects, and testimonial evidence showed they didn't even consider it - even though they had a discretionary duty of reviewing her submissions. Parties need to exercise good faith with regard to their discretionary duty.

CISG Article 7

Good faith is observed in international trade.

UCC 1-302 (Variation by Agreement)

Obligations of good faith, diligence, reasonableness and care may NOT be disclaimed.

UCC 1-304 (Obligation of Good Faith)

The UCC says every contract imposes upon each party a duty of good faith and fair dealing with NO EXCEPTIONS!

UCC 1-201 (Good Faith Definition)

The UCC says good faith means honesty in fact and the observance of reasonable & fair commercial standards.

R205 (Duty of Good Faith and Fair Dealing)

every contract imposes upon each party a duty of good faith and fair dealing with NO EXCEPTIONS!