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Essay / Good faith and fair business practices: a legal approach...
article 1-304, which states that: “[a]ny contract or obligation within [UCC] imposes an obligation of good faith [and 'fair use] in its execution and application” (UCC § 1-304, 2012). The legal consequences of violating good faith and fair dealing practices were illustrated in the case of Sons of Thunder, Inc. v. Borden, Inc. of 1997. Defendant (Borden Inc.) breached its implied duty of good faith and fair dealing. by reducing its contract with the plaintiff. Based on these actions, the jury awarded the plaintiff compensatory damages of $412,000, which the plaintiff would have received had the contract been performed (Sons of Thunder, Inc. v. Borden, Inc., 1997) . Subject to the precedent of this case, the breach of the implied duty of good faith and fair dealing in my contract would also constitute a remedy for compensatory damages on the part of the defendant. Although the defendant may claim that his son was not an authorized agent of the company when signing the contract; the doctrine of estoppel legally destroys the validity of this claim. The doctrine of estoppel in the Restatement (Third) of Agency (2006) at §2.05 states: "A person who has not manifested that an actor has authority as an agent and who is not otherwise liable as a party to a transaction purportedly carried out by the actor on behalf of that person is liable to a third party who is justifiably induced to make a detrimental change of position because it is believed that the transaction is made on behalf of the person, if the person intentionally or negligently caused such a belief” (Restatement (third) of Agency, 2006, §2.05). Under section 2.05, the doctrine of estoppel constitutes a reasonable defense to the validity of the contract since the negligence of the defendant's son led me to believe that he was an authorized agent of