good faith--market street associates : LUSENET : Lessig's Contracts : One Thread

i am having trouble, after a long while, squaring the market street associates role (not conception) of good faith with the 1-203 provision of the UCC. according to the UCC there is an imposed obligation of good faith in all contractual performances and enforcements. but the official comment seems to give a different slant to the notion from the one imparted by posner. it reads, relevantly, "this section means that a failure to perform or enforce, in good faith, a specific duty or obligation under the contract, constitutes a breach of that contract..." "The doctrine of good faith merely directs a court towards interpreting contracts within the commercial context in which they are created, and does not create a separate duty of fairness and reasonableness which can be independently breached."

It seems to me from the foregoing that GE could have sued Market for the breach of duty of good faith, but not that they could have used it as an excuse from enforcement of their own duty under the contract. I am truly baffled.

Of course the answer may lie in a section i edited from the first quote, "[failure to perform in good faith] makes unavailable, under the particular circumstances, a remedial right or power." But this only makes it messier, in light of the second quoted passage.

Does it then mean that one can operate in bad faith and, unless sued, she gets away with it but in retaliation cannot get a remedy from the other party's failures?

If this is the case, could Market street not then claim that GE breached its own duty by not fully considering the request and being informed about the terms of the contract, and thus they are, somehow, estopped from claiming the breach of the duty as a defense? Does it just boil down to a shouting match as to who was operating in worse faith, thus arguably defeating the whole purpose of the doctrine?

This question has ruined my Christmas. No, not really. But any help would be appreciated.


-- Anonymous, December 25, 1998

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