Thursday, March 22, 2012


Listen to Judge Mary Ellen Coster Williams of the United States Court of Federal Claims:

"In addition to obligations expressly set forth in the text of a contract, every party to a contract owes a common law 'covenant of good faith and fair dealing' to its contracting partner. [Citation omitted.] This implied duty obligates the parties to act 'with good faith and fair dealing in [their] performance and in [their] enforcement' of the contract. [Citation omitted.] A party must refrain from doing anything 'that will hinder or delay the other party in performance of the contract' or that will destroy the other party's reasonable expectations regarding the fruits of the contract. [Citation omitted.] The duty of good faith and fair dealing encompasses the duties to cooperate and not hinder contract performance."

We should hasten to add it also includes the duty to communicate and disclose information vital to contract performance. To which we also should add the duty to clearly state contract requirements and provide specifications free from errors, conflicts and omissions.

Notice in Judge Williams' opinion her reference to the government's obligation to refrain from anything that will destroy the other party's reasonable expectation regarding the fruits of the contract. The Armed Services Board of Contract Appeals says this requires the government to do everything reasonably necessary to enable the contractor to perform.

This rule has been around a long time. But the workforce turns over and changes. Education is improving but experience is the best teacher. It's time we reminded everyone of the legal obligations of the parties to a contract. In practical terms, this means they should work together and communicate. It's the law.

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