Friday, April 16, 2010

Covenant of Good Faith and Fair Dealing

Delaware continues to generate opinions on the implied duty of good faith and fair dealing. The latest is Nemech v. Schrader, 2010 Del. LEXIS 150 (Del. Sup. Ct. Apr. 6, 2010). Note that there is a vigorous dissent in the case by Justice Jacobs, joined by Justice Berger. There is much to be found in the opinion to assist counsel and other courts in applying the implied covenant. Here, quickly, is one statement taken from an earlier Delaware Chancery Court opinion, Amirsaleh v. Bd. of Trade of the City of New York, 2008 Del. Ch. LEXIS 131 (Del. Ch. Sept. 11, 2008):

“[T]he law presumes that parties never accept the risk that their counterparties will exercise their contractual discretion in bad faith.”

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