An important law governing New Jersey commercial transactions is known as the “implied covenant of good faith and fair dealing”. This law states that all parties involved in New Jersey commerce are obligated to act in good faith and fair dealing in business transactions. This obligation covers a wide range of activity, including fraud, deceit, withholding key information, etc.
Why is this law necessary when there are multiple other legal claims that can be pursued if a consumer is defrauded, such as breach of contract and theft just to name a few. The law of implied covenant of good faith and fair dealing is in place as a fallback claim for those who are defrauded yet cannot legally pursue legal relief by use of another claim. The NJ legislature intended this claim to cover a broad range of fraudulent activities to give consumers confidence in commercial transactions and to help ensure that businesses will not be able to get away with fraudulent practices due to loopholes in the law. The typical situation in which the implied covenant of good faith and fair dealing is relied upon involves one party seeking to take advantage of another party in a transaction because of a technicality in the contract or by taking advantage of the other party. By claiming the implied covenant of good faith and fair dealing, consumers can increase the chances of a successful outcome and circumvent loopholes in their contract.
To show a violation of the implied covenant of good faith and fair dealing, a New Jersey consumer must be able to prove either bad motive or wrongful intentions on the part of the defendant. While this may seem easy, it can often be a daunting task. A recent New Jersey court found a defendant not guilty of fraud or violating implied covenant of good faith and fair dealing, despite the fact that they sold land, the majority of which was non-developable to the plaintiff. The Court held that even though the plaintiff contracted to buy the land with the intention of building on it, the defendant did not know the land could not be developed when they sold it to the plaintiff. The Court held that without a bad motive or wrongful intent on the part of the plaintiff, they could not be found to have violated the implied covenant of good faith and fair dealing.
Courts will require you to show specific evidence in order to prove your case alleging a violation of the implied covenant of good faith and fair dealing. Please contact Fredrick P. Niemann, of Hanlon, Niemann and Wright, a NJ Consumer Fraud law firm, if you have any questions regarding New Jersey Consumer Fraud laws or the implied covenant of good faith and fair dealing. He can be reached toll-free at (855) 376-5291 or by email at fniemann@hnlawfirm.com. Mr. Niemann would be more than happy to discuss your case with you.