The good faith standard, in itself, does not alter, or extend, the terms of the contract – it merely prohibits conduct that frustrates the explicit agreement:
Illinois like other states requires, as a matter of common law, that each party to a contract act with good faith, and some Illinois cases say that the test for good faith “seems to center on a determination of commercial reasonability.” The equation, tentative though it is (“seems to center on”) makes it sound as if, contrary to our earlier suggestion, the judges have carte blanche to declare contractual provisions negotiated by competent adults unreasonable and refuse to enforce them. We understand the duty of good faith in contract law differently. There is no blanket duty in good faith; nor is reasonableness the test of good faith.[1]
Thus, good faith merely polices subjective bad conduct in the performance of the contact. It is in this sense that good faith in contract is intention-implementing. It is in this sense that Professor Burton reports: “In my view, courts generally do not use the good faith performance doctrine to override the agreement of the parties. Rather, the good faith performance doctrine is used to effectuate the intentions of the parties, or to protect reasonable expectations, through interpretation and implication.”[2]
[1] Original Great American Chocolate Chip Cookie Co., Inc. v. River Valley Cookies, Ltd., 970 F. 2d 273, 279-80 (7th Cir. 1992) (Posner, J.).
[2] Burton, “More on Good Faith,” supra note 50, at 499.
Articles
10.6 Corporations
The Terms of the Trust: Extrinsic Evidence of Settlor Intent
7.5 Spendthrift Clauses and Trust Termination
6.1 Rules of Construction and Settlor Intent
1.3 The IRS Has Attempted to Derail Family Limited Partnership Planning
1.2.3 Revocable by the Grantor
7.2 Theoretical Underpinning
2.1 Attractive Attributes To Motivate Use
5.3 Maryland’s Version of the Prudent Investor Rule
3.4 Tortfeasor Access
2.3.9 Charitable Set Asides
2. State Variations
2. The Duty of Loyalty
5.4 The Last Uniform Business Entity Act That Addressed This Issue
8.3 Credible Witnesses
2.7 Deductibility of Investment Advice
4. Preserving the Assets
2. The Estate Planning Implications
4.2.2 Spousal Election
1.5.2 Durable Power of Attorney
4.3 Eliminating the Categories under the UTC and Restatement (Third)
4.6 Ascertainable Standards are Measurable
5.1 Validity in General
9.5 The UTC/Restatement Controversy
5.2.2 Not Effective Substitutes for a Broad Fiduciary Duty
3.2.2 Examples of Strict Construction
6.3 Exceptions to the Plain Meaning Rule
2. Extrinsic Evidence and the Terms of the Trust, the Plain Meaning Rule
2.1 Equity Jurisdiction for Actions Against Trustees
3.3 Enforceable Rights to Beneficiaries
3.1 Duty to Supply Copy of Trust Instrument
3.1.1 Good Faith Test
5.6 Other Spousal Property
10.1 The Privilege and the Attorney for a Trust
1.1 The “Terms of the Trust”
8.2 Dead Man’s Statute is Strictly Construed
4.1.1 The “Probate Fee”
3.3 The Nature and Form of the Accounting
2.11 Beneficiary Right to Enforcement and the Supplemental Needs Trust
3.2 The Nature and Scope of the Trustee’s Duty
5.5 Diversification and the Modern Portfolio Theory
2.9 Extended Discretion and Court Enforcement of Distributions
11.3 Transfer of Death Accounts
4.1 A Close Look at Drye and Craft
2.3 Remedies
6. Proceedings in Multiple Courts
5.1.1 The Fiduciary Obligation of Partners
3.1.2 Settlor’s Intent
6.5 Exception to Plain Meaning for Surrounding Circumstances
8.5 The Beneficiary as Trustee of Third Party Trusts
5.2 Nature of the Tenancy
8.3 Examples of Strict Construction
2.1.1 Trust Income is Taxable to the Grantor
8.1 The Maryland Dead Man’s Statute
3. The Stripping Out of Fiduciary Duty
2.5 Retaining the Categories in the Maryland Trust Code Proposal
1.3 Transfer of Death Accounts
8.2 Creditors and Limited Powers of Appointment
2.4.1 Federal Estate Tax
1.2.2 Irrevocable Trust
1.3 Contractarian Basis
2.3 “Respectable” Asset Protection Planning
7.1 The State of Mind/Intent Exception to the Hearsay Rule
7.2 Exception Covers the Declarant’s Later Action
1.3 Fiduciary Duty Generally
1.3.4 Joint Trusts/Joint Wills Issues
4.2 The Support/Discretionary Trust Distinction in Maryland
4.5 Ascertainable Standards and Estate Planning
4.2.1 Prohibiting Conduct That Frustrates the Explicit Agreement
2.3.1 The Latent Ambiguity Exception
1.2 The Importance of the Right to Information
1.3.3 Joint Trusts and Entireties Property
5.7 The Craft Case
1.1.1 An Express Trust
7.1 In General
1.3.1 Definition
1.4 Revocable Trusts
1.3.2 Revocation of Joint Trusts
1.4.1 Referred to as “Living Trusts”
5.2 Power of Attorney With the Ability to Disclaim
1.5.1 Definition
4. Bankruptcy Reform
2.1.2 Filing Requirements
12.1 Enforcement of Liens
2.2.2 The Gift From the Trust Problem Solved
2.3.6 Separate Share/65-Day Rules
2.4 The Handling of the Plain Meaning Rule Under the U.T.C.
2.3.7 Throwback Rules
1.1.5 Separation of Beneficial and Equitable Titles
2.3.8 Personal Exemptions
2.3.10 Joint Tax Return
1.1 The Origin of the Duty Owed
2.4.2 State Inheritance Tax
3.1.2 Death Before the Required Beginning Date
4.3 Creditors and General Powers of Appointment
4.2.1 Time Considerations
4.2.4 Medicaid Considerations
4.8 Extended Discretion and Court Enforcement of Distributions
4.2.5 Title Insurance
4.2.6 Maintaining Privacy
4.2.7 Planning for Disability
5.2 The Prudent Investor Rule
8.5 Opening the Door to Excluded Evidence
6.4 The Latent Ambiguity Exception
6.3 Domestic Asset Protection Trusts
1.1.6 Lack of Separation
2.3.11 Election Under IRC Sec. 645 to Treat Revocable Trusts as Part of Probate Estate
1.2 Impact of Evidentiary Rules in General
10.4 Partnership Interests in Bankruptcy
5.4 Creating or Adding to Entity Property
3.4 Traditional Trust Sense
2.8 The Rights of Remainder Beneficiaries and Ascertainable Standards
1.4.2 The Revised Uniform Partnership Act
1.2 Joint Tenancy
5.1 No Size Fits All in Estate and Asset Protection Planning
4.1 Settlor Intent: Support/Discretionary Trusts
1.1 Trust Law in General
8.3 Creditors and General Testamentary Powers of Appointment
8.1 The Maryland “General” Power
1.1.2 Whether an express trust has been created is a factual determination
2.2 Civil Conspiracy and Other Cases
3.1 “Transfer Creating the Interest”
1.1.3 Trustee and Cestui Que
2.10 Extended Discretion and the Uniform Trust Code
2.6 Powers in the Instrument
1.1 The Tax Clause as a Bequest
1.2.1 Definition
2.1 Uniform Disclaimer of Property Interests Act
2.3 The “Legal List” of Investments
4.1 Fraudulent Conveyance Look-Back Period
1.3 Maryland Common Law
1. Introduction
2.2 Medicaid
4.3 Limits on Homestead Exemption
5.3 Weakness of a Good Faith/Bad Faith Analysis
4.1 “Good Faith and Fair Dealing”
2.4 Eliminating the Categories Under the UTC and Restatement (Third)
3.1 Background
1.2.1 Common Law
5.1 The Law of Partnership Folded into the Law of Contract
8.4 Creditors and Non-Testamentary General Powers of Appointment
4.5 529 Plans
6.1 The Maryland View
3.1 Duty “To Act in Good Faith …”
1. Background
2.1 The Creditor Claim Statute
2.3.4 S Corporation Stock
2.6 Tortious Interference with an Inheritance
4.2 Not Subject to a Qualified Disclaimer
5.1.2 The Traditional Role of Fiduciary Duty in the Partnership Relationship
5.2 The 1997 Revised Uniform Partnership Act and The 2001 Revised Uniform Limited Partnership Act
4.4 Retaining the Categories Under the Maryland Trust Code Proposal
2.3.5 Flexibility as to Tax Year/ Estimated Tax Payments
3.2 QTIP Rule
5. Issues
7.3 Future Action May Include No Action
3.1 In General
1. The Historic Roots and Development of Tenancy by the Entirety
7.3 Special Status Creditors
6.7 Plain Meaning and Inter Vivos Trust
2.3.4 Regardless of the Plain Meaning Rule for Testamentary Trusts, the Plain Meaning Rule Never Applied to Inter Vivos Trusts
The Estate Planning Implications of Stripping Fiduciary Duty from the Uniform Partnership Acts in Maryland and D.C.
Overview of Family Limited Partnerships
3.1 The Statutory Reformation of the Traditional Dead Man’s Statute in Washington, D.C. and Virginia
11.1 The Non-Probate “Revolution”
3.2.4 Opening the Door to Excluded Evidence
Estates & Trusts 101: Planning for Minor Children
8.1 In General
3.1.3 “State of Mind Not Contemplated” Standard
5. The Maryland/ D.C. Experience
8.2 Formalities of Will Substitutes
7.4 Tortfeasor Access
2. “Restatement” (Classification)
5.2.1 Limited Mandatory Rules Governing Partner Relations
4.1 General Comments
1.2 The “Terms of the Trust”
4.3 Trusts for Children
4.9 Extended Discretion and the Uniform Trust Code
2.1 Common Law Rule
9.1 Confidential Relation and the Burden of Proof
4.1 Disclaimed Property
5.3 Joint Action Necessary
4.2 The Inherently Subjective Nature of Good Faith
Relevant Vocabulary
1.1 The Use of Family Limited Partnerships in Estate Planning
10.2 Management Rights; Fiduciary Obligations
11.2 Joint Tenancy
1.1.4 Efficacy of Revocable Trusts as Will Substitutes
10.5 LLCs
5. Conduct in Investing
6.2 The Plain Meaning Rule and Testamentary Trusts.
9.4 UTC Approach
10.7 Family Entities and Divorce
IV. Health Care Directives
2.2 Settlor Intent: Support/Discretionary Trusts
3.2 Accountings and Revocable Trusts
1.2 The Federal Regarding the Tax Burden
2.3 The Support/Discretionary Trust Distinction in Maryland
4.1.1 Law and Economics Practitioners View
2.5 The Statutory Enumeration of Powers
4. The “New” Uniform LLC Approach: Fiduciary Duty Restored
11.4 Revocable Trusts
2.1 Introduction
3.3 Special Status Creditors
4.3 Good Faith in the Performance of the Deal
3.1.1 The Minimum Distribution Rules
3.3.2 “Misinterpretation” Or “Abuse” of Discretion
3.2.1 Required in Every Case Involving Extended Discretion
3. The Duty of Prudence
Choice of Law: Tenancy by the Entirety Across State Lines
3.2.2 Only Certain Trusts to be Permitted as a Designated Beneficiary
5.5 Maryland Tenants by the Entirety Trusts
1. Overview of Fiduciary Relationships
9.1 In General
6. Movables (Accounts)
3.5 Spendthrift Clauses and Trust Termination
2.3.2 Passive Activity Loss Treatment
1. General Background
3.2 Theoretical Underpinning
1.4.3 The Contractarian Worldview
9.3 The Restatement (Third) Approach
3. Tenants by the Entirety and Bankruptcy
1.6 Fraudulent Conveyance Act
2.1 The Maryland Rule of Professional Conduct
The Insolvent Estate (Select Topics from the Maryland Perspective)
1.5.3 Power of Attorney v. Trust
5.4 The Theoretical Underpinnings of the New Rule
2.6 Ascertainable Standards and Estate Planning
2.2.1 Impact Upon Creation of the Trust
6.2 Offshore Trusts
1.4 Fiduciary Duty as a Separate and Stand-Alone, Non-Contract Principle
2.1 Natural Parents Are Guardians
2.3.3 Other “Exceptions” to the Plain Meaning Rule
3.2 Reasonableness Standard
3.2 Maryland Does Not Recognize De Facto Parent Status
6.2 The Uniform Trust Code Codifies the Common Law
4.2.3 Litigation/Dispute Considerations
Duties of a Personal Representative
1. Introduction
11.3.2 Standby Trusts
1.3.1 Implied Bargain
4.1 Introduction
1.1 Planning for Minor Children After the Parents’ Death
3.3.1 Family Relationship
5. Planning in Full Bar Jurisdictions: Post Judgment Transfers and/or Disclaimers in Full Bar Jurisdictions Appendix
Selected Issues Regarding the Orphans Court Jurisdiction
1.4 The Maryland Uniform Estate Tax Apportionment Act
2.2 Advocate of a Contractarian View of Trusts
2.2 Under the Common Law, the Plain Meaning Rule Generally Excludes Extrinsic Evidence for Testamentary Trusts But Not for Inter Vivos Trusts
5. Movables (Tangible Property)
2.2 The Prudent Investor Act
1.5 Other Non-Probate Arrangements
6.6 Other “Exceptions” to the Plain Meaning Rule
1.6.2 The Impact of the Marketing on Responsible Planning
2.4 Statutory Powers in General
3.1 IRC § 721 (b)
1.5 The Common Law and the Codification of the Law of Trusts
5.2 Limits to Exculpatory Clauses
5.1 General Rule
2.3 Enforcement of Liens
4.2 Creditors and Limited Powers of Appointment
4.1.2 Commissions and Legal Expenses
4. Kaouris – Jurisdiction to Construe Written Documents
3.1 Grandparent Visitation Right Statute
1.5 Examples of Tax Clauses
9. Powers of a Personal Representative
3. Limited Jurisdiction – Statutory Framework
1.2 Fiduciary Duty in Law of Partnership
10.3 Proposed Changes to MRULPA
1.4 Fiduciary Standards and Trustee Identity
3. “Immovables” (Real Estate)
3.4.1 Exercise of Fiduciary Duty
2.5 The Impact of Exculpatory Clauses
1.3.2 Contract Standard of Good Faith Dealings
1.4.1 The Uniform Trust Code
11. Special Post-Mortem Issues
3.2.1 Dead Man’s Statute is Strictly Construed
3.4 Disclaimer as Transfer
2.1 Fiduciary Duty Owed by the Trustee
1.1 Asset Protection With Tenancy By The Entireties
3.2.3 A “Transaction” for Purposes of the Statute
2.2 Priority of Claims
4. Movables
10.1 The Charging Order
6.1 A Good Faith Standard within the Context of Broad Fiduciary Duty
The “Terms of the Trust” Extrinsic Evidence of Settlor Intent The Intersection of Planning and Litigation Highlighting Differences Among the Jurisdictions
8.4 A “Transaction” for Purposes of the Statute
3.3 MUDOPIA
4.2 UTMA Accounts
3.1 The Nature and Scope of the Trustee’s Duty: the Johnson Decision
2.7 Ascertainable Standards are Measureable
2.3 Even with the Plain Meaning Rule Under the Common Law, There were Exceptions or “Workarounds” Around the Rule
2.4 Cost of Suit
4.1 The Maryland “General” Power
4.2 Forum Shopping
2.3.3 Other Losses During Administration
3.3.1 Settlor’s Intent
3.2 The Maryland Law
1.1 Definition of Fiduciary Duties
4.7 The Rights of Remainder Beneficiaries and Ascertainable Standards
2. Limited Jurisdiction – History
2.3.2 Exception to Plain Meaning for Surrounding Circumstances
4.4 IRAs; Insurance
5.1 The “Prudent Man Standard”
1.1 The Non-probate “Revolution”
1.2 Concept of Fair Market Value
8. Timeliness
3.2 The Maryland Dead Man’s Statute
2.1 The Common Law Rules of Construction and Settlor Intent
3.3.2 Constructive Notice of Fraud
1.1.1 Fiduciary Relations in Various Settings
3.3 Badges of Fraud
6.3 The Uniform Trust Code Permits Traditional Norms
2.3.1 In General, Section 645 Election
1.6.1 Living Trusts are Heavily Marketed
9.2 Trustee Standards
3.1 Introduction/ Basic Pattern
4.3 Disclaimer of the Survivorship Interest
3.2.1 Final Regulations
7. Duty Not to Delegate
I. Estate Planning
1. Introduction
1.2.2 Economic Interest
2.2 Actions Against Trustees in General
6. Maintaining Accurate Records
4.2 The Craft Aftermath
