IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING PROTECTS NEW JERSEY CONSUMERS FROM FRAUD

By Fredrick P. Niemann, a NJ Fraud Attorney

One of the most important laws in New Jersey businesses is that which 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 pertains to all business dealings and covers a wide range of illegal activity, including defrauding the other party, lying, withholding key information, etc.

Why is this law necessary when there are multiple other avenues of litigation that one can pursue if they are defrauded, such as breach of contract and theft just to name a couple? Basically speaking, the implied covenant of good faith and fair dealing is in place as a general fallback option for those who are defrauded yet cannot pursue action through another claim. Legislatures have intended for it to cover a broad range of fraudulent activities to give consumers confidence in business transactions and to help ensure that criminals will not be able to get away with crimes 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 based upon a technicality in the contract or by taking advantage of the other party based on their lack of the knowledge on the subject matter.  With the implied covenant of good faith and fair dealing, consumers can rest easy that they will not be taken advantage of based on a loophole 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 intention on the part of the defendant. While this may seem easy, it can often be a daunting task. A recent New Jersey court cause found a defendant not guilty of fraud or violating the implied covenant of good faith and fair dealing, despite the fact that they sold land to the plaintiff, the majority of which was non-developable. 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 therefore that without a bad motive or wrongful intent on the part of the defendant, 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.  A skilled New Jersey fraud attorney knows just what to look for and can assist you in bringing the best claim possible. Please contact Fredrick P. Niemann, an experienced NJ Fraud attorney, if you have any questions regarding New Jersey 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.

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