Why No Respect? The Contractual Duties of Good Faith and Fair Dealing in Delaware

13 Pages Posted: 22 Jun 2007 Last revised: 15 Feb 2008

Ann E. Conaway

Widener University Delaware Law School

Date Written: June 17, 2007

Abstract

The thesis of this paper focuses on the statutory policy of "freedom of contract" in Delaware unincorporated entity law and the confusion of some courts in applying these contractarian principles in the face of, what would have been, traditional fiduciary duties. What has resulted is a muddle in the case law caused by the similarity in the terms good faith, in the context of the duty of good faith in contract law, and the term good faith as it is used in the law of business organizations to describe a fiduciary duty of care or the standard of conduct for a director in a corporation. Similarly, puzzlement results when litigators or courts mistakenly interchange the contract term fair dealing with the judicial standard of entire fairness traditionally reserved for the review of conduct by disloyal fiduciaries. In Delaware, it is time for corporate principles to remain in the realm of corporate law and the corpfuscation of unincorporated law to end.

Keywords: Delaware corporations, good faith

JEL Classification: d23, G30

Suggested Citation

Conaway, Ann E., Why No Respect? The Contractual Duties of Good Faith and Fair Dealing in Delaware (June 17, 2007). Widener Law School Legal Studies Research Paper No. 08-05. Available at SSRN: https://ssrn.com/abstract=994624 or http://dx.doi.org/10.2139/ssrn.994624

Ann E. Conaway (Contact Author)

Widener University Delaware Law School ( email )

4601 Concord Pike
Wilmington, DE 19803-0406
United States

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