Also known as: bona fides · good faith
Written by attorneys · grounded in primary & secondary sources — see below
A Latin term denoting honesty and fair dealing in legal transactions and relationships. It requires parties to act without deceit or improper motive when exercising rights or fulfilling duties.
Frank Fisher missed three monthly payments on his home loan from Fulton Shipping. The lender declared the full balance due and began foreclosure proceedings. Fisher argued the acceleration was improper because the lender had not first attempted to work out a payment plan. The court examined whether the lender exercised its acceleration right honestly and without improper motive.
Frostline Textiles received a subpoena for a Rule 30(b)(6) deposition listing five topics. Its counsel contacted opposing counsel to schedule a conference about the scope of examination. The parties discussed which officers would testify on each topic and agreed on designations before the deposition date. The court later reviewed whether the conference satisfied the good-faith obligation.
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Shareholders of Fairview Manufacturing sued two directors for self-dealing. The board formed a committee of qualified directors that reviewed the allegations and concluded the suit was not in the corporation's best interests. The corporation moved to dismiss under the statute. The court assessed whether the committee's inquiry was reasonable and its conclusion reached honestly.
Faye Fuller asked her lawyer whether a proposed real-estate transaction would violate tax reporting rules. The lawyer explained the statutory requirements and advised Fuller on how to structure the deal to comply. The lawyer also discussed potential penalties if the transaction were later challenged. The ethics board later reviewed whether the lawyer had assisted in conduct known to be fraudulent.
A newspaper reporter received a grand jury subpoena seeking the identity of a confidential source. The reporter moved to quash, claiming a First Amendment privilege. The government showed the investigation was proceeding in good faith and that the testimony was needed. The court ordered the reporter to appear and testify.
Foster Forge held a mortgage on property owned by Francesca Fowler. After default, the lender began nonjudicial foreclosure. Fowler claimed the lender failed to provide required notices and rushed the sale. The court examined whether the lender had complied honestly with every statutory step throughout the process.
No. Courts apply an objective standard of reasonableness. A lawyer or party must conduct a reasonable inquiry and have a basis in law or fact that a reasonable person would accept, even if the actor subjectively believes the position is correct.
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A court may dismiss if a qualified group makes the determination in good faith after a reasonable inquiry that continuing the suit is not in the corporation's best interests. The plaintiff must allege particularized facts showing the determination failed to meet these standards.
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A lawyer may discuss legal consequences and assist a client in making a good-faith effort to determine the law's validity or meaning. The lawyer may not counsel or assist the client in conduct the lawyer knows is criminal or fraudulent.
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No. The Supreme Court has held that the First Amendment does not grant journalists a privilege to refuse to testify or withhold sources in good-faith grand jury investigations.
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…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…