So, ISDA Counterparties Don’t Have to Deal in Good Faith, or Do They?

May 08, 2017

The implied contractual duty of good faith and fair dealing is well enshrined in the common law, including in New York and every jurisdiction in the U.S. Since, by its nature, however, the duty is not susceptible of precise definition, its application is more art, than science. Thus, it is sometimes difficult for lawyers to counsel their clients when a client wishes to exercise his or her contractual rights, particularly where the conduct is not prohibited but could result in disproportionate harm to the counterparty. Generally speaking, most lawyers probably counsel their clients that they may exercise contractual rights consistent with the contract's express provisions provided that they are not acting maliciously, or with an intent to cause harm.

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