In New York, within every contract is an implied covenant of good faith and fair dealing. The covenant is breached when a party acts in a manner that deprives the other party of the right to receive benefits under their agreement. The covenant encompasses any promises which a reasonable person in the position of the promisee would be justified in understanding were included. See 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 153, 746 N.Y.S.2d 131, 773 N.E.2d 496 (N.Y. 2002); Dalton v. Educational Testing Serv., 87 N.Y.2d 384, 389, 639 N.Y.S.2d 977, 663 N.E.2d 289 (N.Y. 1995); Frankini v. Landmark Constr. of Yonkers, Inc., 91 A.D.3d 593, 595, 937 N.Y.S.2d 80 (2d Dep’t 2012); Ochal v. Television Tech. Corp., 26 A.D.3d 575, 576, 809 N.Y.S.2d 604; Leon C. Lazer, et al., New York Pattern Jury Instructions – Civil § 4.1 (2d ed. 2006).
Further, in New York, every contract or duty relating to the present or future sale of goods, and every other contract or duty within the New York Uniform Commercial Code, “imposes an obligation of good faith in its performance or enforcement.” N.Y. U.C.C. § 1-203; see id. §§ 1-105(1), 2-102, 2-106(1). ” ‘Good faith’ means honesty in fact in the conduct or transaction concerned.” N.Y. U.C.C. § 1-201(19).
In the case of a merchant engaged in a transaction in goods in New York, ” ‘Good faith’ . . . means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.” N.Y. U.C.C. § 2-103(1)(b); see id. § 2-104(1) (defining ” ‘[m]erchant’ “); id. § 2-102.
If your company wants to bring, or needs a lawyer to defend it in, business litigation and you are located in the New York City area, call Attorney David S. Rich at (347) 941-0760.
About the Author David S. Rich is the founding member of the Law Offices of David S. Rich, LLC,
a New York Employment and Business Litigation Law Firm, in New
York City and in Englewood Cliffs, New Jersey...Read more