Corporate & Securities Law

Negotiating Around the Duty of Good Faith

By Ken Adams

In this May 2007 blog post I mentioned the dispute between Crusader Entertainment and schlockmeister Clive Cussler. In this post, the ContractsProf Blog provides the latest installment in this gripping saga?an opinion by a California appellate court.

Here’s the bit that caught my eye:

On the key issue in the appeal, the court found that Cussler had a contractual right to review and reject proposed changes to the original Approved Screenplay “for unreasonable reasons … or for no reason at all.” The court rejected Crusader’s argument that granting Cussler such broad discretion rendered the agreement illusory, since Crusader retained the right to produce the film using the Approved Screenplay. In short, because the contract did not require Cussler to act either reasonably or in good faith, he could not be held liable for having failed to do so.

So if a contract governed by California law explicitly grants you the right to behave utterly unreasonably, the other party can’t complain if you take the opportunity to do just that.

How does this play out in other jurisdictions, in the U.S. and elsewhere?

Full post as published by AdamsDrafting on March 09, 2010 (boomark / email).