By Dr. Ken Broda Bahm:
In a recent mock trial, the jurors deliberated on the meaning of the duty of good faith and fair dealing. The conversation went something like this:
Juror 1: They clearly met the contract. I mean, look at the language.
Juror 2: Yeah, but did they treat the Plaintiff the way you would have wanted to be treated?
Juror 1: No, I don’t think it was totally fair…but that isn’t the question. It’s about the law, not fairness.
Juror 2: Not just about the law. Look at this, ‘good faith and fair dealing.’ The other claims are about the law and the contracts and such, but this claim is about fairness.
Juror 3: So, if we feel that the Defendant met all their legal duties, but we still just have a bad feeling about how they acted, then this is the claim we can go for, ‘good faith and fair dealing?’
Juror 1: That’s right. If they’re not ethical in your opinion, then they violated good faith.
Of course, that is a pretty expansive and legally inappropriate view of good faith and fair dealing. But, unfortunately for some defendants, it is also a very common view. In contrast to the other more concrete claims, this one seems subjective and focused on fairness rather than the law. When jurors are armed with just a casual understanding of the concept, they can end up translating it into an amorphous claim, unmoored from law or contract, that just boils down to an injunction for the defendant to ‘be good.’ To prevent that from simply becoming a catch-all category for juror unease, this post shares a few thoughts on bringing that concept down from the clouds and tying it, despite the name, back to the law and the contract.
Dissociate the Idea from Jurors’ Common Sense Views
As with other legal concepts, it can sometimes help to call out the likely misimpression:
When you first come across the label for this next claim, “good faith and fair dealing,” you might think that you already understand the idea. Because in common speech, we already know what we call ‘good,’ and we already know what we call ‘fair’. But on this one, I encourage you to wait for the legal instructions. Because, while it might sound like just an open-ended idea focused on your personal view of fairness, it is still a legal rather than just an ethical duty. It is still born of the contract that is at issue in this case. And, at the end of the day, this is still a court of law and not a court of fairness.
Tie It to the Most Concrete Terms Your Instructions Permit
The problem here, of course, is that the instructions often aren’t all that concrete. Taking a look at one definition, “The duty of good faith and fair dealing is breached when a party acts contrary to that agreed common purpose and the parties’ reasonable expectations,” it seems like that doesn’t move the ball very far in the direction of clarity. But at the same time, it is an improvement. The “agreed common purpose” and the “reasonable expectations” of the parties are both concepts that can be addressed through the factual evidence. Other definitions emphasize “honesty” or “meeting obligations,” which are also more concrete. And even if it is still a little vague, it is much better than the open-ended idea of fairness. So, push for the most concrete language possible. And once you have your language, use that language. So, in the case of the instruction above, the defense attorney would be well advised to spend more time talking about “common purpose” and “reasonable expectations,” rather than “good faith and fair dealing.”
Remind Them that the Duty is Born from the Contract
The final step in making good faith and fair dealing more concrete is to address the question of where the idea comes from. And the answer is that it emerges from a contract. Every contract contains an implied duty of good faith and fair dealing, but there is not simply a floating duty that is disconnected from any contract. So when the instructions spell out the concepts at issue, look to the contract to give those terms meaning. So, in the case of the definition above, what defines the “common purpose” of the parties? The contract. What sets the “reasonable expectations” of the parties? The contract.
It is an important issue if you want to be judged on the law rather than on jurors’ idiosyncratic views on fairness: As much as you can, bring the idea back down to earth and tie it to your already-defined legal duties.
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Other Posts on Commercial Litigation:
- Don’t Say Nothing: The Limitations of “No Comment” as a Litigation Crisis Strategy
- Don’t Be Faceless
- Account for the Wealth Bias
- Keep Your International Arbitration out of the Tower of Babel
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Image credit: 123rf.com, used under license