Breach of Duty of Good Faith and Fair Dealing
Breach of Duty of Good Faith and Fair Dealing by Sacramento’s Business Attorneys
“There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.”1
The covenant is designed to ensure parties to a contract work with each other honesty and fairly. For example, Party X guarantees a minimum amount of compensation over a period of time, and Party Z agrees to provide movie scripts for Party X’s production. There was an implied covenant of good faith and fair dealing that Party X would work with Party Z’s movie scripts. Although the minimum compensation was paid and there was a right to reject the scripts based on subjective dissatisfaction, a breach of the covenant was found in this situation when Party X categorically refused to work with Party Z.
When alleging a breach of the duty of good faith and fair dealing, you should be very specific and use the particular facts that demonstrate the breach. These facts should be distinguished from your allegation(s) for breach of an express term in a contract; otherwise, your complaint for breaching the covenant of good faith and fair dealing may be disregarded.
A complaint for breach of an express contractual term is not a prerequisite for claiming a breach of the implied covenant of good faith and fair dealing. The goal of the implied covenant is to prevent a party from unfairly frustrating another party’s right to receive agreed upon benefits that were not expressly defined.2 Because these benefits were not expressly defined in a contract, each breach of duty of good faith and fair dealing is truly a case-by-case factual analysis.
A Partnership is an agreement between two or more individuals to carry on as co-owners of a business for profit. Partnerships can be created without any paperwork and countless partnerships exist without the creators even realizing it. When a partnership is created, the duty of good faith and fair dealing is also created. “A general partner shall discharge the duties to the partnership and the other partners…and exercise any rights consistently with the obligation of good faith and fair dealing.” Corporations Code Section 15904.08(d).
Plaintiff – Breach of Duty of Good Faith and Fair Dealing
Contact our Sacramento business litigation attorneys for help in determining whether a party in your contract has breached the covenant of good faith and fair dealing. Our business attorneys will help you by analyzing your particular case and determining, among several things:
- Whether there was a valid contact;
- Whether the implied covenant complied with the express terms of contract;
- Whether the other party’s conduct constituted a breach because it unfairly prevented you from receiving benefits you were entitled to receive under contract; and
- The amount of damages you may be entitled to receive.
Defendant – Breach of Duty of Good Faith and Fair Dealing
Contact our Sacramento business attorneys for help in determining whether you can defend against someone who is claiming you breached the covenant. We will oppose the claim by filing the appropriate demurrer, affirmative defense(s), or motion to strike. We will analyze your case and determine, among several things:
- Whether the statute of limitations has run on the Plaintiff’s claim;
- Whether there was a contractual relationship;
- Whether the alleged breach deprived the Plaintiff of any benefits;
- Whether the Plaintiff is attempting to create obligations under the contract that did not originally exist; and,
- Whether the amount of damages can be contested.
Contact Sacramento’s Business Litigation Attorneys
If you need help determining possible liability or want advice on a possible breach of duty of good faith and fair dealing, contact our Sacramento business attorneys to set up an initial consultation.
By: Trevor Carson Google+
*The information provided in this post does not constitute legal advice or opinion. The information is for guidance purposes only. Individual situations vary. You should contact our Sacramento law firm for a consultation to learn more. Image: FreeDigitalPhotos.net. Sacramento’s business attorneys discuss breach of duty of good faith and fair dealing.
Sacramento Business Law Resources
California Secretary of State, located in Sacramento at 1500 11th St, Sacramento, CA 95814.
Superior Court of California, Sacramento County, located in Sacramento at 720 Ninth Street, Sacramento, CA 95814,