Centronics Corporation v. Genicom Corporation case brief
Centronics Corporation v. Genicom Corporation case brief summary
562 A.2d 187 (1989)
A contract between plaintiff buyer and
defendant seller provided for arbitration of disputes on the price
and required an escrow deposit of a portion of the price pending
final valuation. The seller alleged that the buyer breached an
implied covenant of good faith in refusing to release an undisputed
portion of the escrow fund. A trial court of Hillsborough County (New
Hampshire) granted summary judgment in favor of the buyer.
CASE FACTS When the arbitration dragged on, the
seller sought an escrow distribution in an amount that the seller
claimed was in excess of what would be the eventual purchase price.
When the buyer refused, the seller charged the buyer with breach of
an implied covenant of good faith. The trial court found that the
contract did not require the buyer to agree to a distribution during
arbitration and that the seller was merely seeking to revise the
On appeal, the court affirmed.
The court found that the
implied obligation of good faith at common law set limits on
discretion in contractual performance.
The contract did not confer
such discretion on the buyer over the timing of distributions from
the fund that, in the absence of some good-faith limitation, it could
deny the seller a substantial proportion of the contract's benefit.
To the contrary, the contract contained express and unequivocal
provisions governing the timing of payment.
The buyer had no
discretion to withhold approval or to affect the timing of the
Alternatively, the buyer's refusal was not bad faith as
an exercise of discretion meant to recapture an opportunity foregone
at the creation of the contract.
CONCLUSION The court affirmed the judgment of the
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