1. Implied-in-Law Conditions and (contrary) Substantial Performance
Contract Conditions
Implied-in-Law Conditions and (contrary) Substantial Performance
As a matter of public policy, sometimes by statutory direction, courts may imply in law conditions, including duty of good faith, duty to cooperate, duty to properly inform, etc. (all probably stem from to act in good faith).
Where courts go too far and imply too often or freely, state legislatures may limit this (e.g. insurance industry).
Special Cases in Common Law where these are common: fiduciary relationships (e.g. real estate or investment brokers), highly regulated industries (e.g. municipalities, public and quasi public utilities, common carriers).
A sale-of-goods example includes the Perfect Tender Rule – if a good is not in conformity with terms of the agreement, non-breaching buyer may reject it outright, among other options. This stands in stark contrast to the common law’s “Substantial Performance” doctrine.
Terms may be implied in common law as well as sale-of-goods situations.
Sometimes this is done because parties intended something but failed to specifically address it in contractional arrangements – but sometimes it may be courts trying to be fair, keep deals together, etc.
Courts that too freely recognize implied duties in contracts situations may be engaging in “judicial legislation” possibly in contravention of freedom of contract and/or the parties’ intent. The state legislature may choose to remedy by defining (limiting) the nature of such duties.
Note again that this is something courts do as a matter of law (and they still have the authority where implication is based on facts).
© 2018 Paul J. Carrier, Paul J Carrier, LLC Blue – Category Recognition; White – Specific Category; Yellow – “Black Letter” Rules (to be memorized); Green – Main Factual Issues – Analysis; Red – Upper-Level, Integrated Comprehension