DPLE 266 Ethics. Understanding the Good Faith Obliga3on

Size: px

Start display at page:

Download "DPLE 266 Ethics. Understanding the Good Faith Obliga3on"

Henry Austin
5 years ago
Views:

1 DPLE 266 Ethics Understanding the Good Faith Obliga3on

2 An Interview with Uche Okoroha RLI

This program is registered with the AIA/CES for con3nuing professional educa3on.

3 RLI Design Professionals is a Registered Provider with The American Ins:tute of Architects Con:nuing Educa:on Systems. Credit earned on comple:on of this program will be reported to CES Records for AIA members. Cer:ficates of Comple:on for non- AIA members are available on request. This program is registered with the AIA/CES for con3nuing professional educa3on. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construc3on or any method or manner of handling, using, distribu3ng, or dealing in any material or product. Ques3ons related to specific materials, methods, and services will be addressed at the conclusion of this presenta3on.

4 Copyright Materials This presenta3on is protected by US and Interna3onal Copyright laws. Reproduc3on, distribu3on, display and use of the presenta3on without wrihen permission of the speaker is prohibited. RLI Design Professionals

5 Course Description Conduct Your Business By the Book! Whether you re an architect, engineer, surveyor, landscape architect, or other design professional, when contracting with other parties, there are standards for good faith and fair dealing that you are ethically obligated to practice. This course will teach you the most common ethical pitfalls of contracting with other parties, how to avoid them, and how courts will interpret the discrepancies if they arise.

6 Learning Objectives Participants in this course will: q Learn about the minimum standard of care required when contracting with others and how this standard protects the health, safety, and welfare of the public. q Determine what actions can cause bad faith and unfair dealing in contracting with other parties and how these actions can impact the welfare of the community at large. q Understand the ramifications of not practicing ethical behavior when negotiating contracts. q Identify different methods courts use to enforce invalid contracts in order to protect the welfare of the public.

7 Good Faith and Fair Dealing An implied covenant that neither party will unfairly deprive the other party of the benefit of the contract

8 Bad Faith Acts Intentional Action against contractual obligation Elements Violating basic standards in dealing with others Dishonest or misleading

9 Evasion and Inaction Frustrating the reasonable expectations of the contract by refusing to take action

10 Evasion and Inaction Evasion of the spirit of the bargain Lack of diligence Willful rendering of imperfect performance Failure to cooperate with other party s performance

11 Failure to Negotiate Upon Reasonable Terms

when intending not to reach an agreement Use of

12 Failure to Negotiate Upon Reasonable Terms Breaking off negotiations in bad faith Continuing negotiations when intending not to reach an agreement Use of unequal bargaining power to force irrational contract provisions

13 Abuse of Process Misuse of the judicial process as a way of harassing or harming another party

14 Abuse of Process Existence of an ulterior purpose or motive underlying the use of process Some act in the use of the legal process not proper in the regular prosecution of the proceedings Cartwright v. Wexler, Wexler & Heller, Ltd., 369 N.E.2d 185, 187 (Ill. App. Ct. 1977).

Standards of Breach Common Law Where the terms of a contract are literally complied with but one party to the contract deliberately contravenes the intention and spirit of the contract,

15 Standards of Breach Common Law Where the terms of a contract are literally complied with but one party to the contract deliberately contravenes the intention and spirit of the contract, that party can incur liability for breach of the implied covenant of good faith and fair dealing. - Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 107 Nev. 226, 808 P.2d 919, 923 (1991)

16 Standards of Breach - UCC NRS Obligation and good faith. Every contract or duty within the Uniform Commercial Code imposes an obligation of good faith in its performance and enforcement NRS (t) Good faith, except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standings of fair dealing

17 Duress When a party in a position of power exerts improper and excessive pressure over the other party A common law concept that allows voiding of the contract by the injured party

18 Economic Duress Wrong or improper threat No reasonable alternative The threat actually induces the contract The contract has caused financial distress

19 Undue Influence The doctrine of duress led to the more narrow doctrine of undue influence, which requires a lower burden of proof Improper pressure Not a direct physical or financial threat Undue influence

20 Presumed Undue Influence Parent & Child Doctor & Patient Attorney & Client Trustee and Beneficiary Religious Adviser & Disciple Principal & Agent A special relationship establishes a presumption and shifts the burden

21 Actual Undue Influence Coercion Misleading Statements Improper Conduct Blackmail Threats of Frivolous Litigation

22 Rebutting the Presumption Once the presumption of undue influence arises, the burden of proof shifts to the defendant Must prove that the contract was entered into under free will The weaker party fully understood and intended the transaction

23 Lack of Consideration Consideration something of value that induces parties to enter into an agreement Courts will declare a contract unenforceable if it lacks proper consideration Consideration can be a promise of action or forbearance Not all promises are enforceable

24 Illusory Promise

25 Illusory Promise Illusory Promise The promise maker has the choice of whether to perform or not Can result from lack of consideration Judicial Reaction Courts favor legally binding contracts May enforce good faith intentions of the parties to overcome illusory promise

26 Promissory Estoppel 1. Forseeability 2. Reliance 3. Injustice

27 This concludes The American InsAtute of Architects ConAnuing EducaAon Systems Program Laurel Tenuto, Client Risk Management Coordinator Barbara Sable, Director, Professional Enterprise Risk SoluAons Uche Okoroha, Senior Risk Management Consultant

Chapter 11 Consideration and Promissory Estoppel 25-1

Chapter 11 Consideration and Promissory Estoppel 25-1 Consideration Consideration: something of legal value given in exchange for a promise Necessary for the existence of a contract Elements: Something