You are here: / / IMPLIED COVENANT OF GOOD FAITH DOES NOT APPLY WHERE THE CONTRACT ALLOWS...

IMPLIED COVENANT OF GOOD FAITH DOES NOT APPLY WHERE THE CONTRACT ALLOWS REFUSAL OF LOANS FOR ANY REASON, EVEN THOUGH THE REFUSAL MAY HAVE BEEN INTENTIONALLY AIMED AT PUTTING PLAINTIFF OUT OF BUSINESS.

The First Department, in a full-fledged opinion by Justice Saxe, modifying (reversing) Supreme Court, determined that a contract provision which allowed defendant (Capital One) to deny loans to plaintiff (TFA) for any reason trumped any implied covenant of good faith and fair dealing, even though defendant’s actions GODDput plaintiff out of business:

Although “[i]n New York, all contracts imply a covenant of good faith and fair dealing in the course of performance” … , the existence of the covenant cannot be relied on as grounds for TFA’s action . The covenant of good faith and fair dealing cannot negate express provisions of the agreement … , nor is it violated where the contract terms unambiguously afford Capital One the right to exercise its absolute discretion to withhold the necessary approval … . Where a contract allows one party to terminate the contract in “its sole discretion” and for “any reason whatsoever,” the covenant of good faith and fair dealing cannot serve to negate that provision … . Notably, where the parties intended to limit either party’s rights under the loan agreement so that they could only be exercised “in good faith,” they specifically included such language; for example, section 1.1 of the agreement allows Capital One to establish a valuation methodology “in its sole and absolute discretion exercised in good faith.” In contrast, the provision of section 2.1 authorizing Capital One to decline any request for an advance “in its sole and absolute discretion” lacks any such limitation requiring Capital One to act in good faith when doing so. Because Capital One’s complained-of conduct consists entirely of acts it was authorized to do by the contract, its alleged motivation for doing so is irrelevant. Simply put, an intent to put TFA out of business cannot justify a lawsuit for a claimed breach of the covenant where the express provisions of the agreement allowed Capital One to act as it did. Transit Funding Assoc., LLC v Capital One Equip. Fin. Corp., 2017 NY Slip Op 01525, 1st Dept 2-28-17

CONTRACT LAW (IMPLIED COVENANT OF GOOD FAITH DOES NOT APPLY WHERE THE CONTRACT ALLOWS REFUSAL OF LOANS FOR ANY REASON, EVEN THOUGH THE REFUSAL MAY HAVE BEEN INTENTIONALLY AIMED AT PUTTING PLAINTIFF OUT OF BUSINESS)/GOOD FAITH, IMPLIED COVENANT (IMPLIED COVENANT OF GOOD FAITH DOES NOT APPLY WHERE THE CONTRACT ALLOWS REFUSAL OF LOANS FOR ANY REASON, EVEN THOUGH THE REFUSAL MAY HAVE BEEN INTENTIONALLY AIMED AT PUTTING PLAINTIFF OUT OF BUSINESS)

You might also like
CITY DEFENDANTS SHOULD HAVE BEEN SANCTIONED FOR FAILURE TO PRESERVE PRE-ACCIDENT POLICE COMMUNICATIONS IN THIS POLICE-VEHICLE TRAFFIC ACCIDENT CASE BECAUSE THE CITY DEFENDANTS WERE AWARE THEY WOULD PROBABLY ASSERT AN EMERGENCY DEFENSE (FIRST DEPT).
NEW YORK CITY LOCAL LAW BANNING E-CIGARETTES DOES NOT VIOLATE THE ONE SUBJECT RULE OF THE NEW YORK STATE CONSTITUTION, THE MUNICIPAL HOME RULE LAW OR THE NEW YORK CITY CHARTER.
PLAINTIFF’S DECEDENT COMMITTED SUICIDE BY JUMPING FROM A LEDGE OUTSIDE HIS HOTEL ROOM; HOTEL STAFF DID NOT ASSUME A DUTY OF CARE FOR PLAINTIFF’S DECEDENT; A DELAY AFTER A FAMILY MEMBER’S REQUEST THAT HOTEL STAFF CALL THE POLICE WAS NOT DEMONSTRATED BY EXPERT OPINION TO HAVE CAUSED THE SUICIDE (FIRST DEPT).
Question of Fact Whether Snow Removal Contractor Created Hazardous Condition by Inadequate Salting
RPAPL 1301, WHICH PROHIBITS SIMULTANEOUS ACTIONS AT LAW TO RECOVER ON A NOTE AND ACTIONS IN EQUITY TO FORECLOSE A MORTGAGE, DOES NOT APPLY TO OUT-OF-STATE PROPERTIES; RPAPL 1371 DOES NOT APPLY TO OUT-OF-STATE FORECLOSURES AND THEREFORE DOES NOT PROVIDE A BASIS TO DEEM A JUDGMENT SATISFIED UPON A FORECLOSURE SALE (FIRST DEPT).
APARTMENTS RECEIVING TAX BENEFITS PURSUANT TO RPTL 421-g ARE SUBJECT TO THE LUXURY VACANCY DECONTROL PROVISIONS OF THE NYC RENT STABILIZATION LAW AND WERE PROPERLY DEREGULATED (FIRST DEPT).
COURT SHOULD NOT HAVE CONSIDERED A NEW THEORY OF MEDICAL MALPRACTICE RAISED FOR THE FIRST TIME IN RESPONSE TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT (FIRST DEPT).
PLAINTIFF’S VERDICT IN THIS ASBESTOS CASE PROPERLY SET ASIDE, INSUFFICIENT PROOF PLAINTIFF WAS EXPOSED TO DANGEROUS LEVELS OF ASBESTOS EMANATING FROM DEFENDANT’S PRODUCTS.

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

PROPERTY OWNERS’ FRAUD AND OFFICIAL MISCONDUCT COUNTERCLAIM SHOULD HAVE... ALTHOUGH THE CHILD HAD NOT BEEN HARMED, MOTHER’S MENTAL ILLNESS JUSTIFIED...