Court Opinion

ID: 9722849
Source: CourtListenerOpinion
Date Created: 2023-08-26 09:52:30.843356+00
Date Added: 2024-06-11T18:24:40.586750
License: Public Domain

Goodman, J.
(dissenting). The jury found, and the majority is willing to assume (as stated in its opinion at 390) that the defendant “terminated the plaintiff’s contract as a salesman for the purpose of avoiding the incurring of further liability to the plaintiff under the contract for bonus credits applicable to the First National order,” and thus acted in bad faith. But the majority reads out of the contract the “implied covenant [“in every contract”] that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract, which means that in every contract there exists an implied covenant of good faith and fair dealing.” Druker v. Roland Wm. Jutras Associates, Inc. 370 Mass. 383, 385 (1976), quoting from Uproar Co. v. National Bdcst. Co. 81 F. 2d 373, 377 (1st Cir.), cert. den. 298 U. S. 670 (1936). Restatement 2d: Contracts, § 231 (Tent. Drafts Nos. 1-7, 1973). (“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”) I do not believe the extraordinary reading the majority gives to this “Salesman’s Contract” is warranted by the provisions that allow either party to terminate the contract at will “with or without cause,” and the defendant to change the salesman’s territory “at any time.” See Gebhard v. Royce Aluminum Corp. 296 F. 2d 17, 18 (1st Cir. 1961). It is precisely to provisions such as these, where one party is given a wide discretion, that a good faith limitation would seem particularly applicable. See, e.g., Chandler, Gardner & Williams, Inc. v. Reynolds, 250 Mass. 309, 314 (1924); Krauss v. Kuechler, 300 Mass. 346, 349 (1938); G. L. c. 106, § 1-208 (Uniform Commercial Code). See also Restatement 2d: Contracts, § 254, comment a (Tent. Drafts Nos. 1-7, 1973). See generally, Corbin, Contracts, § 644 (1960) (“Promises Conditional on Personal Satisfaction”); Williston, Contracts, § 675A (3d ed. 1961) (“Promise Conditional on Satisfaction”, especially pp. 189-191).
*396The plaintiff knew, of course, when he entered into this contract, that his employment could be terminated and that his territory could be changed, but he had a right to assume that when the defendant exercised its prerogatives, it would not do so in order to avoid its undertakings to pay bonus credits in the future. Without a requirement of good faith dealing, such a future undertaking becomes not “additional compensation” as the bonus structure is characterized in the “Salesman’s Contract”, but illusory. Blish v. Thompson Automatic Arms Corp. 30 Del. Ch. 538, 569 (Sup. Ct. 1948). See also Restatement 2d: Contracts, § 79, comment a (Tent. Drafts 1-7, 1973) (“Illusory promises”), and material cited from Restatement 2d: Contracts, § 254, Corbin, and Williston above.
Further, the implication in the majority opinion that parties may contract themselves out of an obligation of good faith dealing seems to me to be unsound. It runs counter to the Uniform Commercial Code which provides in c. 106, § 1-203 (tracked in § 231 of the Restatement 2d quoted above), that “[ejvery contract or duty within this chapter imposes an obligation of good faith in its performance or enforcement,” and further (in § 1-102) that “the obligations of good faith, diligence, reasonableness and care prescribed by this chapter may not be disclaimed by agreement.” Compare Restatement: Contracts, § 575(1) (1932) (“A bargain for exemption from liability for the consequences of a willful breach of duty is illegal...”). Certainly employment contracts, in which the parties are probably less likely to have equal bargaining power, should not have less stringent guarantees of fair dealing.
Finally, I see no distinction in principle between the present case and RLM Associates, Inc. v. Carter Mfg. Co. 356 Mass. 718 (1969), which, as the record in that case reveals, also involved a detailed, written “agreement” signed by both parties which could “be cancelled by either of the two parties upon thirty days written notice.” That case seems to me to answer the suggestion in the majority opinion that a duty of good faith dealing may be applicable only to unilateral contracts and not ordinary bilateral con*397tracts. See also Eastern Paper and Box Co. Inc. v. Herz Mfg. Corp. 323 Mass. 138, 142 (1948). RLM Associates also disposes of the suggestion that the principle of good faith dealing is somehow restricted to the type of unjust enrichment usually found in the brokerage cases. In RLM Associates the court noted: “RLM, entitled to a commission on any sale in the territory, was not bound to show to what extent it had contributed to obtaining the award____” Furthermore, the record in this case discloses evidence from which the jury could have found that the plaintiff had cultivated the First National Stores account over a long period, and had laid the ground work for what he characterized as a “once in a lifetime sale.”
Because the jury could have believed that the defendant’s termination of the plaintiff’s contract was motivated by a desire to avoid the paying of commissions I believe the case was properly submitted to the jury.