Also known as: good faith & ordinary care · good faith · ordinary care
Written by attorneys · grounded in primary & secondary sources — see below
A standard of conduct requiring honest dealing without knowledge of facts that would make the action improper, combined with the exercise of reasonable diligence and prudence under the circumstances.
Giselle Guerrero missed two mortgage payments on her home. Glacier Energy, the lender, reviewed her payment history and account statements before declaring the full balance due. Because Glacier acted honestly and checked the records with reasonable diligence, the acceleration complied with the required standard.
Global Dynamics received a deposition notice describing topics about its supply contracts. Its counsel conferred with the plaintiff's attorney, identified knowledgeable employees, and designated them after reviewing internal files. The company's honest and diligent preparation satisfied the standard for the organizational deposition.
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Greenleaf Farms formed a committee of qualified directors to investigate a shareholder demand alleging mismanagement. The directors reviewed documents, interviewed officers, and concluded in an honest and careful manner that pursuing the suit would harm the company. Their determination met the required standard.
Attorney Gina Griffin advised client Gloria Green about a proposed business structure. Griffin researched the relevant statutes, explained potential risks, and helped Green explore lawful alternatives without encouraging any improper conduct. The advice reflected honest inquiry and reasonable professional care.
Journalist Georgia Gibbs received a grand jury subpoena seeking her notes on a public corruption story. She appeared, answered questions about non-confidential matters, and withheld only truly protected sources after confirming the investigation's legitimacy. Her conduct demonstrated honest participation and appropriate caution.
Golden Gate Logistics began foreclosure on a defaulted home loan. It sent required notices, verified borrower information through its records, and proceeded only after confirming all statutory steps. The lender's honest and diligent actions throughout satisfied the mandated standard.
Good faith requires honesty in fact and the absence of knowledge of facts that would make conduct improper. Ordinary care adds the obligation to exercise reasonable diligence and prudence, such as reviewing records before taking action.
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The standard appears in banking relationships, foreclosure proceedings, discovery conferences, corporate governance decisions, and professional conduct rules where parties must act honestly while also exercising reasonable care in fulfilling duties.
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Failure can prevent enforcement of rights such as acceleration or foreclosure, expose a party to liability, or result in denial of protections that require the standard, because courts scrutinize whether the party acted honestly and with reasonable diligence.
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