How to Defend Yourself Against Good Faith Violation Lawsuit
The duty of good faith is implied in every contract. It means that when you enter into an agreement with someone else, you agree not to lie, act against the spirit of the agreement, or go against something the other party obviously understood.If you are sued for breach of contract, the other party may allege that you violated the implied covenant of good faith. Defending yourself against a good faith violation lawsuit often requires presenting evidence outside the contract that shows you acted in a straightforward and fair manner with regard to the other party.
Drafting an Answer
Read the complaint.If you've been sued for breach of contract, read the complaint and summons carefully so you understand the lawsuit and how much time you have to respond.
- If the lawsuit is based on a contract you entered a long time ago, check your state's statute of limitations. This law provides a deadline to file lawsuits.
- In many states the statute of limitations for lawsuits based on written contracts is as long as 10 or 15 years, while others such as Maryland only give plaintiffs three years to sue.
- Make sure the court in which the lawsuit was filed has jurisdiction – especially if the court is far away from you. The plaintiff typically should file his or her lawsuit in the county where you live.
- The summons includes information such as the name and address of the person suing you and the deadline you have to respond to the lawsuit. You typically have 30 days or less to file a written response to the lawsuit, or the plaintiff may win by default. The summons will tell you how long you have.
Consider consulting an attorney.If you've been sued in small claims court, you typically won't need an attorney. However, if the suit is larger and there is a lot at stake, you might want to contact an attorney with experience in business and contract law.
- An experienced attorney will understand the types of evidence you need and the defenses you can raise.
- Typically your local or state bar association will have a searchable directory on its website of attorneys licensed to practice in your area. Often you can limit your search by practice area.
- The standard for interpreting the implied covenant of good faith varies from state to state, and judges often exercise a good deal of discretion in deciding whether someone violated the covenant. For this reason, even if you don't ultimately hire an attorney to represent you for the entire case, it's a good idea to consult an attorney on your state's law and how it applies to the lawsuit against you.
Format your answer.You may be able to find a form or template online or at the clerk of court's office; otherwise, you'll have to format your answer yourself.
- If the plaintiff filed in small claims court, there may be an answer form included with your complaint and summons. If the lawsuit was filed in civil court, look on the website for your state's courts to see what forms are available.
- Most courts will have a sample answer that you can use as a guide to format your own, even if fill-in-the-blank forms aren't available.
- If you can't find a form, set up your answer using a word processing program to print on standard 8.5 x 11 white paper with one-inch margins all around. These are the default settings on most word processing applications.
- The top third of the first page of your answer will be the caption. Copy this exactly from the complaint you received.
- Skip two lines from the caption and title your document "Answer." Then skip two lines and write a sentence stating who you are. For example, you can write "Comes now [your name], Defendant in the above-titled action, and answers the complaint as follows."
Analyze the allegations.Go through each numbered paragraph and determine whether you want to admit or deny it.
- You don't have to get fancy or use a lot of legalese to respond. Simply type the number that corresponds to the paragraph and then your answer: admitted or denied. You also can state that you "lack sufficient information to either admit or deny the allegation," which the court treats the same as a denial.
- Keep in mind that when you deny an allegation, you aren't saying it's untrue. Rather, you're forcing the plaintiff to prove that the facts in that allegation are true. If you admit an allegation, that's something the plaintiff no longer has to prove.
- You must respond to each numbered paragraph in the complaint. If you don't, the court will assume that you've admitted that allegation.
- At this stage, you aren't expected to explain your response or provide evidence. You can deny every paragraph of the complaint if you want. The plaintiff has the burden of proof in a civil case. By denying the allegations you simply force the plaintiff to meet that burden and prove his or her case against you.
Examine available defenses.After you've addressed the complaint's allegations, you should list any defenses that even remotely apply to your case.
- Keep in mind that at this stage you don't have to prove anything – you're simply preserving the argument for later. As the case progresses, you may decide to use every defense listed in your answer, or not to argue some of them.
- The law also allows you to argue in the alternative – both in your answer and at the trial itself. This means you can raise defenses that seem to contradict each other.For example, you can argue that you performed as required by the contract and that you failed to perform but your failure was justified by the plaintiff's actions.
- Common defenses recognized by courts for breach of contract include mistake and illegality (a court won't enforce a contract if it is made for an illegal purpose such as gambling or prostitution). Any of these defenses, depending on your situation, may serve as a good faith reason you did not fulfill your duties under the contract.
- Another common defense when one party is arguing bad faith is estoppel. This defense is available if the plaintiff said you didn't have to perform, then later denied saying that and insisted on performance.For example, if it was snowing on the day you were supposed to finish the roof on a house and the homeowner said "don't worry about it, just finish it next week," she couldn't later sue you for failure to complete the roof by the date in the contract.
File your answer.You must submit your answer to the clerk of court before the deadline listed on your summons.
- Sign your answer and make copies before you take it to the clerk. You'll need at least one copy for your own records and one copy to have delivered to the plaintiff.
- Once your answer is filed, you are responsible for having it officially served on the plaintiff. The clerk will have the forms you need to complete service.
- You can have your answer personally hand-delivered by a sheriff's deputy or private process serving company for a fee. However, the easiest way to complete service is to mail the answer to the plaintiff (or the plaintiff's attorney) using certified mail with returned receipt requested. The signed form indicating receipt of the answer is your proof of service.
Preparing Your Case
Gather information.To defend yourself against a good faith violation lawsuit, you should look for documents and other evidence that show your motivations and actions regarding the contract.
- Keep in mind that if you've raised any defenses, you have the burden of proving the facts that apply to those defenses.For example, if you argue that you couldn't deliver the products the plaintiff ordered under the contract on the date specified because of a shipping mix-up, you must provide evidence of the mistake that prevented you from delivering the goods.
- The key to proving a good faith violation is proving you acted intentionally, even maliciously, in refusing to perform as you originally agreed under the contract.Therefore, to defend yourself against a good faith violation lawsuit, you must find evidence that shows your failure to perform was not intentional.
- If you qualify as a merchant under the Uniform Commercial Code, the good faith standard is an objective one that requires the plaintiff to prove distinct elements. Under the UCC, merchants must be honest in fact and also observe reasonable commercial standards of fair dealing.
- Generally, a merchant is someone who sells goods or services on a regular basis.
- Information about the reasonable standard may require reviewing other court cases to determine the acceptable legal standard in your trade or business.You can complete this research online or by working with the librarian at the public law library in your local courthouse.
- If the lawsuit against you is not governed by the UCC, the plaintiff only has to prove the subjective standard – that you weren't honest in your dealings with him or her.
Identify witnesses.Since you have to look outside the contract for evidence to defeat a claim that you violated the covenant of good faith, seek out individuals who were around when you were dealing with your contractual duties and who are willing to testify on your behalf.
- For example, if the plaintiff is alleging that you lied about having certain necessary materials available to complete the contracted project in time, you may want to call a representative from your supplier as a witness. The representative could testify that you were telling the truth and the materials were not in fact available.
- Other employees of yours who were involved in the handling of the contract also may serve as witnesses that you were acting in good faith.
- If you've identified witnesses who won't appear in court to testify voluntarily, you'll need to ask the clerk to issue a subpoena requiring the witness to appear.
Participate in discovery.Through the discovery process, you and the plaintiff can exchange information and you can learn more about the plaintiff's allegations against you and the evidence he or she plans to present in court.
- There are two basic types of discovery: written discovery and depositions. Written discovery includes interrogatories, which are questions that must be answered under oath. Either you or the plaintiff can ask each other questions about the case.
- Depositions are live interviews of the parties or witnesses in a case that are conducted under oath and transcribed by a court reporter.
- If the plaintiff filed in small claims court, you may not have a discovery process – if you do, it will be abbreviated and typically consists only of written discovery.
Consider using mediation.A mediator can help you and the person who has sued you reach a settlement in a less adversarial way.
- A mediator is a neutral third-party professional who is trained in helping parties settle their disputes. The process is far less formal than court proceedings, and the focus is on finding a mutually agreeable resolution rather than finding a winner and a loser.
- Mediation may be especially attractive if the person who has sued you is someone with whom you want to do business in the future, or is someone you encounter frequently in your trade and with whom you want to maintain a reasonably positive relationship.
- Some courts may require you to participate in mediation before the case will be set for trial. When mediation is required, there typically is no charge for participating.
- The clerk of court typically has a list of mediators that are approved by the court, and will allow you to pick one of them to start the process.
Attending Your Trial
Organize your evidence.To prepare for trial, create an outline of your defense with each piece of evidence you plan to present to the judge.
- A chronological outline will help you keep your story straight and ensure that you don't leave out a key point or piece of evidence. Begin with the initial discussions you had with the plaintiff before the contract was signed and outline everything that has happened since then involving the contract.
- Make sure you have at least two copies of any documents you want to present as evidence – one for the judge and one for the plaintiff.
- If you plan to call any witnesses, meet with them before the trial and go over the questions you plan to ask them. Asking a witness a question when you don't know how he or she is going to answer can be dangerous – the answer may hurt rather than help you.
- If you're representing yourself, you may want to go to the court where your trial will be held and observe some other cases, so you can become familiar with court procedures and how to present your defense at trial.
Appear on your court date.Arrive at the courthouse at least a half hour early so you have time to go through security and find your courtroom.
- There may be other cases being tried on the same day, so take a seat in the gallery until the name of your case is called. Then you and the plaintiff will stand and move to the front of the courtroom to take your places at the tables on either side.
Pay attention to the plaintiff's case.The plaintiff will be allowed to present his or her case to the judge first.
- Don't interrupt the plaintiff while he or she is talking. You will have the chance to present your defense later. If the plaintiff says anything with which you disagree, make a note of it so you can bring it up when it's your turn.
- If the plaintiff calls any witnesses, you will have the opportunity to cross-examine them. Take notes on the questions the plaintiff asks, especially if something comes up that you want to ask the witness further questions about.
Present your defense.After the plaintiff has finished, the judge will give you the opportunity to tell your side of the story.
- Focus on the most important parts of your defense first. The plaintiff has argued that you violated the implied covenant of good faith, so place emphasis on the evidence or witnesses you have that demonstrate you did act in good faith.
- Keep in mind that just because you breached the contract, you didn't necessarily do so in bad faith. You still may be liable for damages as a result of breach of contract, but the judge may award more money to the plaintiff if he or she finds your breach was in bad faith.
- Make your points quickly, and stick to the facts.Even though good faith can be subjective, you should avoid attempting to appeal to the judge's emotions or sympathy. The best way to move a judge is to show that the facts are on your side and that your reasons for breaching the contract were sound.
Wait for the judge's decision.Once you and the plaintiff have finished, the judge will issue his or her ruling in the case.
- The judge may issue a ruling from the bench, or may want to review the evidence again before making a decision. If you don't receive a ruling the day of your trial, ask the clerk when you can expect the judge's decision and how you will be notified when the judge has entered an order.
- If the judge doesn't rule in your favor, you have a limited period of time to decide whether to file an appeal or some other post-judgment motion.Consult an attorney to learn more about your options.
- If the judge rules for the plaintiff and you do nothing, the plaintiff will take steps to enforce the judgment against you.In some states, this could result in the plaintiff garnishing your wages until the amount of the award has been satisfied.
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