![\"\"](\"http:\/\/fresnolawyerblog.com\/wp-content\/uploads\/2010\/02\/Arlington-Vt1.jpg\" "\\"Arlington,")
<\/a>\u201cYou are not required to be an altruist, to be candid, to be a good guy.\u00a0 You are permitted to profit from asymmetry of information.\u00a0 If you could not do that, the incentive to discover information about true values would be blunted.\u00a0 It is an example of the traditional economic paradox that private vice can be public virtue.\u201d<\/p>\nTrue, and eloquently stated.\u00a0 The principle of capitalism is that a person should be able to profit from skill and knowledge.\u00a0 Continuing his analysis, Judge Posner explains his view the duty of god faith in contract law, stating that,<\/p>\n
\u201cThere is a legally enforceable contract duty of \u2018good faith,\u2019 but it is just a duty to avoid exploiting the temporary monopoly position that a contracting party will sometimes obtain during the course of performance.\u201d<\/p>\n
OK.\u00a0 Good faith in contract law concerns good faith in performance, not to good faith in contract formation (although he recognizes that some standard of decency is necessary to police unreasonably sharp deals).<\/p>\n
Thus, \u201cMore often than not the parties to a contract do not perform their contractual duties simultaneously, and so one party may unavoidably deliver himself into the power of the other party for a time during the performance of the contract.\u00a0 [Take this example.]\u00a0 A may agree to build a swimming pool for B, and B may agree to pay A upon completion.\u00a0 Suppose that when A has finished, B refuses to pay the agreed-upon price because he knows that A is desperately short of cash and will agree to a reduction in the contract price, having no possible source of cash other than B.\u00a0 A\u2019s cash shortage, coupled with his having completed performance before B has begun and his having no alternative source of cash, gives B a monopoly position as A\u2019s financier; monopoly is inefficient and so a modification of the contract to lower its price will not be enforced.\u201d<\/p>\n
Yes, but, isn\u2019t this conduct bad faith in performance?\u00a0 If so, should the law award extra-contractual damages for violation?\u00a0 Judge Posner continues, citing from his opinion in Market Street Associates v. Frey<\/em>, 941 F.2d 588 (7th Cir. 1991):<\/p>\n \u201cIn all these examples the duty of \u2018good faith\u2019 arises after the contract has been formed; that is why it is properly called the duty of good faith in performing a contract.\u00a0 If I may be permitted to quote again from my opinion in the Frey <\/em>case:<\/p>\n \u201cBefore the contract is signed, the parties confront each other with a natural wariness.\u00a0 Neither expects the other to be particularly forthcoming, and therefore there is no deception when one is not.<\/p>\n \u201cAfterwards the situation is different.\u00a0 The parties are now in a cooperative relationship the costs of which will be considerably reduced by a measure of trust.\u00a0 So each lowers his guard a bit, and now silence is more apt to be deceptive . . .<\/p>\n \u201cAs performance unfolds, circumstances change, often unforeseeably; die explicit terms of the contract become progressively less apt to the governance of the parties\u2019 relationship; and the role of implied conditions and with it the scope and bite of the good-faith doctrine grows.\u201d<\/p>\n We see the analysis heading toward the territory of the fiduciary, in which neither party may take action to deprive the other of the benefit of the bargain.\u00a0 The question is, If the action by the contract-breaker is intentional, after the other party has become vulnerable, should the law respond more harshly?\u00a0 Judge Posner says no \u2013 but on a societal level, why should this be the rule?<\/p>\n Richard A. Posner, \u201cLet Us Never Blame a Contract Breaker,\u201d in Michigan Law Review<\/em> (June 2009), Vol. 107, No. 8, page 1349.<\/p>\n","protected":false},"excerpt":{"rendered":" Continuing his recent discussion of fault in contract law, Judge Posner explains that, \u201cThe idea of \u2018good faith\u2019 is an example.\u00a0 We generally want people to be honest and aboveboard in their dealings with others.\u00a0 But there is no general duty of good faith in contract law.\u00a0 If you offer a low price for some […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,7],"tags":[],"class_list":["post-197","post","type-post","status-publish","format-standard","hentry","category-economics","category-law-reviews"],"_links":{"self":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/197"}],"collection":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=197"}],"version-history":[{"count":0,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/197\/revisions"}],"wp:attachment":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}