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Consumers Int’l v. Sysco Corp.

    Brief Fact Summary.

    Plaintiff sued Defendant for wrongful termination of contract, claiming that the implied covenant of good faith and fair dealing required that any termination at-will clause inherently required a showing of good cause when Defendant gave Plaintiff sixty days notice of its intent to terminate their contract. The trial court granted Defendant’s motion for summary judgment. Plaintiff appealed.

    Synopsis of Rule of Law.

    The implied covenant of good faith and fair dealing inherent in every contract does not require that a termination at will clause in an agreement be interpreted to require good cause.

    Facts.

    Sysco Corp. (Defendant) contracted with Consumers International, Inc. (Plaintiff) to supply at least 80% of the food service products that Plaintiff distributed to its customers. The contract contained a termination at will clause that stated: “This agreement may be terminated . . . [b]y either party upon sixty (60) days prior written notice to the other party.” Defendant invoked this clause and gave Plaintiff sixty days notice of its intent to terminate the contract. Defendant did not offer a reason for its termination of the contract, but there was no evidence of bad faith. Plaintiff sued for wrongful termination of contract, claiming that the implied covenant of good faith and fair dealing required that any termination at-will clause inherently required a showing of good cause. The trial court granted Defendant’s motion for summary judgment. Plaintiff appealed.

    Issue.

    Whether the implied covenant of good faith and fair dealing inherent in every contract requires that a termination at will clause in an agreement be interpreted to require good cause.

    Held.

    No. The trial court’s ruling is affirmed. The implied covenant of good faith and fair dealing inherent in every contract does not require that a termination at will clause in an agreement be interpreted to require good cause.

    Discussion.

    The implied covenant of good faith and fair dealing inherent in every contract does not require that a termination at will clause in an agreement be interpreted to require good cause. In other words “good faith” does not equate to “good cause.” Rather, the implied covenant of good faith and fair dealing as it relates to a termination at will clause merely requires that the party invoking the clause not invoke the clause in bad faith. In the case at bar, Defendant did not necessarily have good cause to terminate the contract with Plaintiff. However, Plaintiff presented no evidence indicating that Defendant acted in bad faith in terminating the contract, either. The implied covenant of good faith and fair dealing does not require Defendant to have had good cause for terminating the contract. Accordingly, summary judgment in favor of Defendant was appropriate. 


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