Also known as: good-faith reliance · good faith
Written by attorneys · grounded in primary & secondary sources — see below
Conduct by which a party acts upon a legal instrument, permit, representation, or process with an honest belief in its validity or applicability. The belief must be objectively reasonable under the circumstances and typically shields the relying party from liability, loss of rights, or other adverse consequences when the instrument or process later proves defective or is invalidated.
Giselle Guerrero missed two monthly payments on her mortgage held by Glacier Energy. Glacier Energy reviewed her payment history and the loan documents before declaring the full balance due. Because Glacier Energy relied in good faith on the acceleration clause in the note, the court upheld the foreclosure proceeding that followed.
Global Dynamics received a Rule 30(b)(6) notice listing five deposition topics. Its counsel and the plaintiff's attorney exchanged emails and held a thirty-minute call to clarify the scope of each topic before the deposition date. The court later denied a motion to compel additional witnesses because the parties had relied in good faith on their agreed understanding of the matters for examination.
Select any source to read its text and confirm it supports the definition.
Shareholders of Granite Holdings filed a derivative suit alleging self-dealing by two officers. The board appointed a committee of two qualified directors who reviewed documents and interviewed witnesses over six weeks. The committee concluded in good faith that continuing the suit was not in the corporation's best interests, and the court dismissed the action on the corporation's motion.
Gavin Grant asked his lawyer whether a proposed transaction would trigger reporting obligations under a recently amended statute. The lawyer spent several days analyzing the statute, regulations, and two analogous rulings before advising that a good-faith argument existed that no reporting was required. Because the lawyer's assistance rested on an honest effort to determine the law's scope, the representation did not violate professional conduct rules.
A newspaper reporter received a grand jury subpoena seeking the identity of a confidential source. The reporter appeared and answered questions after confirming that the investigation rested on a legitimate process the reporter reasonably believed to be valid. The court rejected the reporter's claim of constitutional privilege and ordered continued testimony.
Great Lakes Steel held a mortgage on Gareth Glover's home. After default, the lender sent required notices, accepted a cure payment within the statutory window, and scheduled the foreclosure sale only after confirming compliance with every procedural step. Because the lender relied in good faith on the validity of the foreclosure process, the court denied Glover's motion to set aside the sale.
No. The protection arises from the party's honest and reasonable belief at the time of reliance, even if the instrument or process is later invalidated. Several primary authorities explicitly preserve the defense when the belief was formed without knowledge of the defect.
Supporting sources
Good faith reliance focuses on a party's belief in the validity of a specific legal instrument or process and the resulting protection from adverse consequences. The contractual duty of good faith and fair dealing governs performance and enforcement of an existing agreement and does not require reliance on an external instrument.
Supporting sources
Yes. The belief must be objectively reasonable. When a party has knowledge that would make reliance unwarranted or fails to make a reasonable inquiry, courts treat the reliance as lacking good faith and deny protection.
Supporting sources
It applies in both. The concept protects parties who rely on permits, warrants, corporate determinations, and statutory processes, whether the issue arises in court, before an agency, or in structuring a transaction.
Supporting sources
…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…