When Can a Party Who Does Not Breach The Contract Still be Liable?

Kegler Brown Construction Newsletter

According to the Wyoming Supreme Court, when a City breached the implied duty of good faith and fair dealing, even though the City did not breach the express AIA contract terms. City of Gilette v. Hladky Construction, Inc., 2008 WL 488 9653 (Wyo. Nov. 14, 2008).

The City was found liable for $1.125 million in delay damages when it refused to allow an uncertified manufacturer to deliver pre-cast panels.

Many states incorporate an implied duty of good faith and fair dealing in every construction contract. In those jurisdictions, parties must be careful not only to satisfy the literal meaning of the contract words, but also to act in good faith.