2015 NY Slip Op 50089

Citation: 2015 NY Slip Op 50089
Jurisdiction: New York (state)
Source: Official source
Original Source: https://www.nycourts.gov/reporter/3dseries/2015/2015_50089.htm ↗

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"penalty" or "forfeiture" of a right not contemplated by the law or contrary to public
policy. There are several standards of judicial review.

Notwithstanding the Courts' rules of enforcement, "implicit in all contracts is a
covenant of good faith and fair dealing in the course of contract performance . This
embraces a firm pledge that neither party shall do anything which will have the effect of
destroying or injuring the right of the other party to receive the fruits of the contract
Where the contract contemplates the exercise of discretion, this pledge includes a
promise not to act arbitrarily or irrationally in exercising that discretion" (Dalton v.
Education Testing Serv., 87 NY2d 384, 389, 639 N.Y.S.2d 977, 663 N.E.2d 289
[internal quotation marks and citation omitted]); Gallagher v. Lambert, 74 NY2d
562, 549 N.Y.S.2d 945, 549 N.E.2d 136, rearg. denied 75 NY2d 866, 552
N.Y.S.2d 931, 552 N.E.2d 179; Black v. MTV Networks, 172 AD2d 8, 576 N.Y.S.2d
846, appeal dismissed 79 NY2d 915, 581 N.Y.S.2d 667, 590 N.E.2d 252).

As stated in NY Practice Series-Landlord and Tenant Practice in New
York, §10:11, it is well the implied covenant of good faith and fair
dealings applies to leases. See also, Robert f. Dolan, Rasch's Landlord &
Tenan-Summary Proceedings, §6:13 entitled "Unconscionable Lease or Clause"
wherein the doctrine is discussed. Notwithstanding this implied covenant, our Courts
have assumed the role of policing disputed agreements.

Turning to the UCC, Article 2 that governs the statutory remedies for breach of
contract in a commercial transaction for the sale of goods. In the early case of Equitable
Lumber Corp. v. IPA Land Dev. Corp., 38 NY2d 516, 344 N.E2d 391, 381 N.Y.S.2d