By: Thomas S. Tripodianos Published: July 2011

Is Consultant's claim for breach of the covenant of good faith and fair dealing duplicative of his breach of contract action?

Question. Consultant seeks to recover damages from Client in connection with the collapse of their business relationship, alleging breach of contract and breach of the covenant of good faith and fair dealing. Is Consultant's claim for breach of the covenant of good faith and fair dealing duplicative of his breach of contract action?

Answer. Yes.

Consultant brought an action against Client for its alleged failure to pay various fees to which Consultant was entitled under their agreement. Alleging claims for breach of contract and breach of the covenant of good faith and fair dealing, Consultant seeks "recovery of money damages in connection with the breach of a binding, valid and enforceable contract, and a declaration of its future rights under the contract."

The covenant of good faith and fair dealing "embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." The covenant is implied in every contract governed under New York law. Accordingly, a "breach of the implied duty of good faith is considered a breach of the underlying contract." For this reason, "a claim for breach of the implied covenant [of good faith and fair dealing] will be dismissed as redundant where the conduct allegedly violating the implied covenant is also the predicate for breach of covenant of an express provision of the underlying contract."

Consultant cannot sustain both claims because they are premised on the same set of facts, and "a party may maintain a claim for breach of the implied covenant only if the claim is based on allegations different from the allegations underlying the accompanying breach of contract claim." Because the success of either claim is dependent upon a finding that Client violated the terms of the contract, the claim for breach of the implied covenant is redundant.

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