Thursday, December 22, 2005

contracts - duty of good faith/fair dealing - doctrine of necessary implication

Stamerro v. Stamerro - Superior Court - December 21, 2005

This case involves the interpretation and enforcement of a marriage settlement agreement. The appellate court affirmed the trial court's refusal to lower appellant-husband's contractual duty to pay a certain level of alimony.

duty of good faith and fair dealing
Pennsylvania has "accepted the principle in Restatement (Second) of Contracts, sec. 205 that 'every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcements."

The duty of good faith means honesty in fact in the conduct of transaction concerned . The duty of varies somewhat w/context . A complete catalogue of lack of good faith is impossible , but it includes evasion of the spirit of the bargain and lack of diligence

doctrine of necessary implication
This is similar to the doctrine of good faith and fair dealing. Courts employ this doctrine a s a means of avoiding injustice by inferring contract terms that reflect parties' silent intent .

Absent an express term, the doctrine may act to imply a requirement necessitated by reason and justice and to avoid frustation of the intent of the parties

Doctrines of good faith, fair dealing, and necessary implication apply in limited circumstances and cannot trump express contract provisions . They are principles for courts to use to harmonize the reasonable expectations of the parties with the intent of the contractors and the express terms in their contract.

Donald Marritz
MidPenn Legal Services