Document Type

Article

Publication Date

2001

Abstract

One of Karl Llewellyn's most noted achievements in the Uniform Commercial Code was to impose the duty of good faith on every obligation under the Uniform Commercial Code.1 Some (I am one) have privately thought that imposition of this unmeasurable, undefinable duty was Llewellyn's cruelest trick, but no court, nor any academic writer, has ever been so bold or so gauche as to suggest that good faith should not attend the obligations of parties under the UCC. Notwithstanding this silent indorsement of the duty of good faith, the courts2 and commentators3 have had difficulty in determining what is and what is not good faith performance and very little success in agreeing on standards that might give a court guidance. I direct my attention particularly to cases where contract terms, the law, or a combination of the two, grants discretion to one contracting party. In particular, I have in mind output and requirements contracts under section 2-3064, contracts permitting one party to set the price under section 2-3055, contracts for discretionary performance under section 2-3116, and contracts of indefinite duration that under section 2-3097 give one party the discretion to cancel. In all of these, the party with discretion must exercise that discretion in "good faith." That duty is explicitly stated in the text of the statute in sections 2-305, 2-306, and 2-311. It is brought to section 2-309 from Article 1.


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