Good Faith and Fair Dealing

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Construction contracts often give one party discretion over certain aspects of the administration of a project. For example, a contract may give the owner the “sole discretion” to approve the use of contingency on a job or whether to give a contractor a time extension for an excusable delay.

Even where an owner has discretion to make specific determinations under the contract, there is generally at least one legal principle that limits how the discretion may be exercised—the implied duty of good faith and fair dealing.

I have written about how a contractor may breach the implied duty / covenant of good faith and fair dealing (click here for that post). This post shows how an example of how a public owner breached the implied duty of good faith and fair dealing by, among other things, improperly assessing liquidated damages.Continue Reading The Implied Duty of Good Faith and Fair Dealing

Frequently, the parties involved with building a construction project believe that one of the other parties is acting unreasonably. There are times where one of those parties — the owner, the prime contractor, a subcontractor, or a design professional — act so unreasonably that they may violate the implied covenant of good faith and fair dealing.

Under Florida law, every contract contains an implied covenant of good faith and fair dealing. The purpose of the implied covenant of good faith and fair dealing is to protect the reasonable expectations of the contracting parties in light of their express agreement.

While not a Florida case, a recent federal court case that went to trial in Idaho shows an example of a prime contractor acting unreasonably with its subcontractors on a federal government project.Continue Reading How the Implied Covenant of Good Faith and Fair Dealing Can Apply in Construction Disputes