Also known as: good-faith · bona fides
Written by attorneys · grounded in primary & secondary sources — see below
A state of mind consisting in honesty in belief or purpose, faithfulness to duty or obligation, and observance of reasonable commercial standards of fair dealing without intent to defraud or seek unconscionable advantage.
Select any source to read its text and confirm it supports the definition.
Gwen Gallagher missed two mortgage payments on her home. Granite Holdings, the mortgagee, reviewed her payment history and determined she had no pattern of default before accelerating the full debt. The acceleration was upheld because the mortgagee exercised its right after honest assessment of the default without any ulterior motive to seize the property unfairly.
Great Lakes Steel received a deposition notice describing topics about its supply contracts. The company conferred with opposing counsel and designated two officers who possessed the relevant knowledge. The designation satisfied the rule because the company acted honestly to identify knowledgeable witnesses rather than attempting to obstruct discovery.
Shareholders of Guardian Insurance sued directors for alleged mismanagement. A committee of qualified directors conducted an inquiry into the claims and concluded in good faith that continued litigation would harm the corporation. The court dismissed the suit because the determination rested on a reasonable investigation free of self-interest.
A lawyer advised Gareth Glover on restructuring a business transaction. The lawyer refused to help structure the deal to conceal assets from creditors but discussed the legal consequences of various options. The advice complied with professional rules because the lawyer made a good faith effort to clarify the law without assisting fraudulent conduct.
A journalist received a grand jury subpoena seeking sources for a published story. The journalist appeared and answered questions about non-confidential matters after confirming the investigation was legitimate. The appearance satisfied constitutional requirements because the journalist participated in a good faith official proceeding without claiming an unfounded privilege.
Gustavo Gutierrez defaulted on a home loan. The lender followed every required step in the foreclosure statute, including proper notice and opportunity to cure, while maintaining accurate records. The foreclosure proceeded lawfully because the lender complied with the act in good faith throughout the process.
Good faith requires honesty in fact and observance of reasonable commercial standards of fair dealing. Bad faith includes evasion of the spirit of the bargain, lack of diligence, willful imperfect performance, or interference with the other party's performance.
No. Good faith prohibits trickery and certain forms of obduracy but does not require disclosure of bargaining strategy, reservation price, or every tidbit useful to the other side.
…was not to be found guilty of the offense "unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother." A seemingly notable development in the English law was the case of Rex v. Bourne , [1939] 1 K. B. 687. This case apparently…
…This doctrine is fundamental to the security of negotiable paper. Equally, the holder before maturity is not bound to prove bona fides and value; the law presumes it until rebutted, and it is incumbent upon the defendant to prove otherwise. In the present case Swift was a
…98 F. Supp. 797, 798. In the South Carolina case, the court below found that the defendants were proceeding "promptly and in good faith
…of additional stories, without the permission of the Landmark Preservation Commission, a permission which appellants, despite good-faith
…and inspection in advance and the failure to obtain inspection may unreasonably delay trial; and (4) the application is made in good faith
A court must dismiss if qualified directors or a properly constituted committee determine in good faith after reasonable inquiry that the suit is not in the corporation's best interests. The plaintiff must allege particularized facts showing the determination failed those standards.
A subsequent purchaser prevails only by taking in good faith for value without notice of prior unrecorded interests. Inquiry notice of a prior claim defeats good faith status and prevents the purchaser from gaining priority.
A landowner acquires vested rights when acting in good faith reliance on a permit or zoning by making substantial expenditures or changing position so that revocation would be inequitable. Jurisdictions vary on whether a valid permit plus substantial construction is required or a balancing test applies.