The Latest on the Duty of Good Faith Between Contracting Parties

Originally published at www.irvinschein.com.

The recent case of Ashbury Cleaners v. Crisolago Holdings may make the murky world of the law concerning the duty of good faith between contracting parties even murkier.

In this case, the Judge described the action as a claim "for damages for breach of contract and bad faith." The Judge went on to say that "in order to be successful, the plaintiff must prove on the balance of probabilities that the defendant was acting in bad faith in deceiving the plaintiff of its stated intention."

The law is very clear: there is no independent duty of good faith upon which one can sue for breach. Parties are obliged to act in good faith towards each other in the implementation of a contract but one cannot sue for damages for bad faith. There is a distinction, and this case is very close to the line.