Paralegal Certification PrepContracts and Business LawMedium
A paralegal is reviewing a contract for the sale of custom-made furniture. The contract states that 'delivery shall be made within a reasonable time.' After 10 weeks, the buyer has not received the furniture and the seller has provided no updates. The buyer wants to know if they can terminate the contract. Which of the following principles applies?
- AForce majeure
- BPromissory estoppel
- CImplied duty of good faith and fair dealing
- DDoctrine of substantial performance
Show answer & explanationAnswer & explanation
Correct answer: C. Implied duty of good faith and fair dealing
Even without an explicit 'time is of the essence' clause, contracts generally include an implied duty of good faith and fair dealing, which requires parties to act reasonably and not to interfere with the other party's ability to perform. An unreasonable delay without communication breaches this implied duty.
Why the other options are wrong
- A. Force majeure clauses excuse performance due to unforeseeable circumstances, which is not directly applicable to defining a 'reasonable time' or the seller's lack of communication.
- B. Promissory estoppel applies when a promise is made and relied upon, leading to detriment, not primarily to define 'reasonable time' in an existing contract.
- D. Substantial performance applies when performance is nearly complete, not to a complete lack of performance or unreasonable delay.
Implied Duty of Good Faith and Fair Dealing
A common law principle that holds that parties to a contract must act in good faith and deal fairly with each other, even if specific terms are not explicitly stated.
- Applies to most contracts.
- Prevents parties from acting arbitrarily or unreasonably.
- Requires cooperation and adherence to the spirit of the agreement.
Memory trick: Good faith and fair dealing: 'Good' for both, 'Fair' for all.