Also known as: goodwill · good-will
Written by attorneys · grounded in primary & secondary sources — see below
An intangible asset consisting of the established reputation, customer relationships, and expected future patronage of a business. The asset can be transferred separately from other property in a sale or disposition and can serve as a basis for damages when lost through breach or tortious conduct. Its value is often difficult to quantify with precision.
Gateway Bank, a limited partnership, received an offer to buy its entire branch network and customer base. General partner Gabriella Gomez wanted to exclude goodwill from the sale to retain the customer relationships for a new venture, but the other partners insisted on including it. Because the transaction involved substantially all partnership property, unanimous consent of all partners was required before the deal could proceed.
Gregory Gates sold his clothing line to Greenleaf Farms and transferred the registered mark along with the associated customer loyalty and brand reputation. The buyer paid a premium specifically for the goodwill built through years of consistent quality and marketing. Without the transfer of goodwill, the mark alone would have carried far less value in the marketplace.
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Gareth Glover, a longtime member of a youth organization, objected when the group admitted individuals whose views conflicted with its traditional values. The resulting shift in public perception reduced the organization's ability to attract families and donors who had previously supported its programs. The loss of that accumulated goodwill threatened the group's continued viability and distinct identity.
George Garcia purchased a new vehicle from Gulfstream Aviation after seeing advertisements emphasizing safety and reliability. When hidden defects surfaced shortly after delivery, the manufacturer's refusal to honor its promises damaged the dealer's standing with repeat customers. The resulting erosion of goodwill reduced future sales even though the immediate repair costs were covered.
Golden Gate Logistics owned coastal property used for a profitable warehousing operation. New state regulations barred all commercial development, eliminating the company's ability to serve its established client base. The destruction of the business's goodwill constituted a total loss of the intangible value built through years of reliable service.
Gretchen Graham operated a retail store inside a large shopping center owned by Lloyd Corp. When the owner banned all handbilling on the premises, Graham lost the ability to reach shoppers who had previously visited her store because of its reputation for quality goods. The restriction diminished the goodwill she had developed with the center's regular customers.
The sale of substantially all partnership property requires the affirmative vote or consent of all partners whether or not goodwill is included in the transaction. This unanimous-consent rule prevents a majority from forcing a disposition that strips the partnership of its intangible value.
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A lawyer or law firm may sell a practice or area of practice, including goodwill, provided client notice and consent requirements are met. If a client cannot be notified, court approval is required before the representation may be transferred to the purchaser.
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Courts require reasonable certainty in proving damages. Loss of goodwill is an item for which great precision cannot be expected, so recovery is permitted only to the extent the evidence permits the loss to be established with reasonable certainty.
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Goodwill of a business is recognized as a species of intangible personal property that can be possessed, assigned, and protected like other property interests.
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…there is a final decision about what uses of the property will be permitted. The ripeness requirement is not simply a gesture of good will to land-use planners. In the absence of "a final and authoritative determination of the type and intensity of development legally permitted on the subject property," MacDonald, Sommer &…