The parties to a contract are in a cooperative venture and a minimum of cooperativeness in the event unforeseen problems arises at the performance stage, even if not an explicit duty of the contract. "Good faith"' is a compact reference to an implied undertaking not to take opportunistic advantage in a way that could not have been contemplated at the time of drafting.
Plaintiffs, lessor partnership and its general partner, brought an action against defendants, lessor trust and individual trustees, claiming that defendants breached their duty of good faith performance of the parties' contract. The district court granted summary judgment in favor of defendants. On appeal, the court reversed and remanded, holding that summary judgment was not proper because the facts could have been interpreted in favor of plaintiffs.
Should further trial be conducted to determine whether plaintiffs acted in bad faith?
Under the parties' contract, plaintiff lessor was entitled to purchase the leased property at a price computed in the contract if its request for financing to make improvements on the property failed. After defendants refused financing, plaintiffs sought to purchase the property. Plaintiff general partner did not alert defendants to the computation paragraph in the contract. Viewing the facts favorably to plaintiffs, the court found that whether plaintiffs acted in bad faith in not notifying defendants of the paragraph bore on plaintiff general partner's state of mind.