Delaware Business Litigation Report

Supreme Court Divides Over When Fair Dealing Claim Exists

Nemec v. Shrader , C.A. 305, 2009 (April 4, 2010)

In a rare split amongst the Justices, the Delaware Supreme Court has divided over when the duty of good faith and  fair dealing applies. The majority opinion is an example of the views of  Chief Justice Steele who is noted for his stance that  a contract should be held to fix the parties' rights and there is little room to add to those rights under the so-called duty to act in good faith and with fair dealing.  If the circumstances that the plaintiff complains of might have been anticipated when the contract was drafted, it is too bad if the contract does not give the plaintiff what he now wants.

The two Justices in the minority, Justices Jacobs and Berger, are not so sure they want to rely entirely on what the parties put into their contract to define their rights in all circumstances. They are more inclined to expand a party's rights when they feel the other side has acted in a way that would not have been agreed to had they thought about it beforehand.

For now at least, the strict upholding of the contracts limits has won the day.

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