In latest edition of The Wright Toolbox:
- Implied Duties in Your Contract
Implied Duties in Your Contract
Every contract includes an implied duty that each party will cooperate with one another by not hindering or impeding the performance of the other party’s contractual duties. One court stated “[T]he law will imply an obligation to act in good faith and to deal fairly with the other party when necessary to the performance of a condition.” It may be possible to argue in a given case that a breach of these implied duties is a material breach of the contract which may excuse performance or permit a party to recover damages caused by the failure to adhere to the implied duties.
The defense of hindrance and/or interference is perhaps best illustrated by the case of Blake Constr. Co., Inc. v. C.J. Coakley Co., Inc. Blake Construction was the general contractor for the construction of the Walter Reed Hospital and engaged Coakley as its subcontractor for the performance of fireproofing work on structural steel. The subcontract contained a “no damages for delay” clause and a changes clause and expressly provided that Coakley had to prosecute its work in accordance with the project schedule provided by Blake. Delays in the delivery of structural steel at the outset of the project led to the disruption of the critical path. Coakley repeatedly advised Blake that its workers were being impeded by the conditions on the job and that it was incurring costs in excess of those anticipated as a result. Ultimately, as a result of these and other breaches on the part of Blake, Coakley walked off the job.
The Court found that Blake hindered and prevented Coakley’s performance because the schedule established an unreasonable sequence; the job site was not in suitable condition for Coakley to perform its work; and Blake did not cooperate with Coakley when necessary to assure Coakley’s performance. The court refused to enforce the no damages for delay clause in the contract on the grounds that the damages were not contemplated by the parties and the damages resulted from the active interference of Blake. This is a valuable lesson – even though the contract may not say anything about prohibiting a particular course of conduct, every contract still has an implied duty of good faith and fair dealing to fill in the gaps and ensure all parties “play nicely in the sandbox.”
If you have questions regarding the issues discussed in this post, please do not hesitate to contact Michael A. Stover, Esq. (email@example.com) or any member of the Surety and Fidelity Practice Group.