J. Implied TermsSee footnote 1 (5/98) You may find that the parties must have intended certain contract terms because they are necessary to fulfill the elements of the contract. However, the implied terms may not alter the oral or written terms of an otherwise express contract. You may not imply terms to the extent of making a new or better contract for either party. You must decide whether the plaintiff has shown by a preponderance of the evidence that the implied terms were part of the contract at the time it was made.See footnote 2 1. Good Faith and Fair Dealing The law implies a requirement that each party to a contract must act in good faith and deal fairly with the other party in performing or enforcing the terms of the contract. This implied agreement is part of the contract, just as though the contract
expressly states this good faith and fair dealing requirement.See footnote 3 To act in good faith and deal fairly, the parties must act honestly toward each other when performing or enforcing a contract.See footnote 4 The party shall not do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.See footnote 5 The implied covenant of good faith and fair dealing may not override an expressly granted right under the contract. For example, an implied covenant of good faith and fair dealing may not override an express provision in the contract giving one party the right to terminate, and the party's motive in terminating under
such circumstances may be irrelevant.See footnote 6 However, a party may not breach the duty of good faith and fair dealing in the performance of the contract.See footnote 7 A party who fully complies with express contract provision may still breach the implied duty in the performance of the contract.See footnote 8 Thus, a party who is expressly entitled to terminate a contract must still give an honest effort until termination actually takes place.See footnote 9
2. Reasonable Time to PerformSee footnote 10 For contracts that do not state when they are to be performed,See footnote 11 the law implies an agreement that the contract shall be performed in a reasonable time. This implied agreement is part of the contract just as though the contract expressly states that the contract shall be performed within a reasonable time. What is reasonable is a question of fact for you to determine from the evidence.See footnote 12 The question you must decide is what reasonable time to perform did the parties intend,
bearing in mind the subject matter of the contract, the surrounding circumstances and what the parties had in mind when the contract was made.See footnote 13 3. Reasonable Duration For contracts that do not say how long they will last, the law implies an agreement that the contract will continue in effect for a reasonable time. This implied agreement is part of the contract just as though the contract expressly stated that the contract shall remain in effect for a reasonable time. What is reasonable is a question of fact for you to determine from the evidence. The question you must decide is what the parties intended, bearing in mind the subject matter of the contract, the surrounding circumstances and what the parties had in mind when the contract was made.See footnote 14
4. Worker-like Manner Unless the contract requires a higher standard, the law implies a requirement that when work is to be performed under a contract, it be done in a worker-like manner. This means that work must be performed with ordinary care and skill, in accordance with accepted practices in the community in which the work is done. Any worker must exercise that degree of skill which a reasonably prudent person skilled in such work would exercise in the circumstances. The implied agreement is part of the contract just as though the contract expressly states that the work is to be performed in a worker-like manner.See footnote 15 5. Customs and Usage Plaintiff claims the contract contained the following implied terms as a matter of custom or usage in the industry [state terms]. The defendant denies this [state claim]. The defendant contends [state contention]. To establish that the contract contained these terms, plaintiff must prove that:
a. there was such an industry custom; and
b. the custom or usage was uniform, log-standing, widespread and so well known and established in the industry that both parties would have reasonably expected the custom to apply to this transaction.See footnote 16 If the plaintiff establishes these two elements, then you will consider the custom or usage to be a term of the contract, just as though the contract stated it expressly.
Footnote: 1 Onderdonk v. Presbyterian Homes of New Jersey, 85 N.J. 171 (1981) (Arrangements embodied in a contract may be such that the parties have impliedly agreed to certain terms and conditions which have not been expressly stated in the written document); New Jersey Bank v. Palladino, 77 N.J. 33 (1978) (Terms will be implied in a contract where the parties must have intended them because they are necessary to give business efficacy to the contract as written).
Footnote: 2 Marini v. Ireland, 56 N.J. 130 (1970) (In determining under contract law what covenants are implied, the object which the parties had in view and intended to be accomplished is of primary importance).
Footnote: 3 See Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396 (1997); Pickett v. Lloyd's, 131 N.J. 457, 467 (1993); Onderdonk v. Presbyterian Homes, 85 N.J. 171, 182 (1981); Bak-A-Lum Corp. v. Alcoa Bldg. Prods. Inc., 69 N.J. 123, 129-30 (1976); Ass'n Group Life, Inc. v. Catholic War Veterans, 61 N.J. 150, 152 (1972); Palisades Properties, Inc. v. Brunetti, 44 N.J. 117, 130 (1965).
Footnote: 4 The U.C.C. addresses the issue. "Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement." N.J.S.A. 12A:1-203. Good faith is generally defined as "honesty in fact in the conduct or transaction concerned." N.J.S.A. 12A:1-201(19). "Good faith in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade." N.J.S.A. 12A:2-103(b). Although the U.C.C. governed in Sons of Thunder, Inc., the Court stated that the common law duty also influenced the Court's analysis. Sons of Thunder, Inc. v. Borden, Inc., supra, 148 N.J. at 420-21.
Footnote: 5 Sons of Thunder, Inc. v. Borden, Inc., supra, 148 N.J. at 420.
Footnote: 6 See Sons of Thunder, Inc. v. Borden, Inc., supra, 148 N.J. at 417 ("We agree...that the implied covenant of good faith and fair dealing cannot override an express termination clause."); id at 423 ("[W]here the contractual right to terminate is express and unambiguous, the motive of the terminating party is irrelevant. . . .As stated previously, we agree with that view of the law."). See also Prudential Stewart Realty v. Sonnenfeldt, 285 N.J. Super. 106, 110 (App. Div. 1995) (party does not breach implied duty of good faith and fair dealing, in exercising contractual right to terminate after six months, regardless of party's motives) certif. denied, 143 N.J. (1996); Karl's Sales & Service, Inc. v. Gimbel Bros., Inc., 249 N.J. Super. 487, 495 (App. Div.), certif. denied, 127 N.J. 548 (1991).
Footnote: 7 Sons of Thunder, Inc. v. Borden, Inc., supra, 148 N.J. at 419 (stating that although the duty does not trump an express termination clause, the court still "must determine whether...[party] performed its obligations in good faith."); id. at 423-24 (stating that party with express termination right must still perform contract in good faith and fairly).
Footnote: 8 Id. at 422-23.
Footnote: 9 Id. at 421-23.
Footnote: 10 This charge is intended to be used where performance promised is something other than payment of money. "Where no time for payment is expressed in a promissory note or other instrument for the payment of money, the law adjudges that the parties meant that the money should be payable immediately." City of Camden v. South Jersey Port Com'n, 2 N.J. Super. 278, 299 (Ch. Div. 1949), aff. and mod. on other grounds, 4 N.J. 357 (1950).
Footnote: 11 A "time of the essence" provision in a contract negotiated at arms length is, really, a provision defining a material breach. The contract typically sets a date for performance and then adds that performance by the time set is essential, in other words, failure to perform timely shall be grounds to terminate the contract. The Appellate Division in Gorrie v. Winters, 214 N.J. Super. 107 (App. Div. 1986), certif. denied 107 N.J. 114 (1987) explained that: "Making time of the essence is an effective, time honored tool of contract administration and enforcement. It provides certainty and objectivity in the definition of rights and obligations between contracting parties, particularly when it has been negotiated between the parties and expressly made a part of the agreement. Judicial tampering with the parties' agreement emasculates this tool and promotes litigation instead of the certainty and objectivity sought by the parties."
Footnote: 12 "While the question what is a reasonable time, depending as it does upon the surrounding circumstances, is ordinarily for decision by the jury or fact-finder, yet when the facts are undisputed and different inferences cannot reasonably be drawn therefrom, the question is for the court." Miller v. Zurich Gen. Accident and Liability Ins. Co., 36 N.J. Super. 288, 296 (App. Div. 1955).
Footnote: 13 In real estate transactions where the contract at first does not include a provision making time of the essence, it can be later made so where "the intention of the parties to make it so [is] clearly spelled out either by an examination of all the surrounding circumstances or by supplemental notice from one party to the other." Paradiso v. Mazejy, 3 N.J. 110, 114-115 (1949). In determining when time is of the essence, "the trier of fact should not use a mechanical test, but should determine the intentions of the parties in light of the instrument itself and all the surrounding circumstances, including the parties words, actions and interpretation of their agreement." John D. Calamari & Joseph M. Perillo, Contracts, 461 (3rd Ed. 1988).
Footnote: 14 Borough of West Caldwell v. Caldwell, 26 N.J. 9, 27-28 (1958) ("What constitutes a reasonable time is usually an implication of fact, and not of law, derivable from the language used by the parties considered in the context of the subject matter and the attendant circumstances, in aid of the apparent intention. Edge v. Boardwalk Securities Corp., 115 N.J.L. 286 (E. & A. 1935).")
Footnote: 15 McDonald v. Mianecki, 79 N.J. 275, 293 (1979) ("...we therefore hold that builder-vendors do impliedly warrant that a house which they construct will be of reasonable workmanship and habitability."); see also Hodgson v. Chin, 168 N.J. Super. 549, 554 (App. Div. 1979). The implied warranty of reasonable quality of work is not coextensive with the implied warranty of habitability in real estate transactions. Aronsohn v. Mandara, 98 N.J. 92, 105 (1984).
Footnote: 16 Kronish v. Howard Sav. Inst., 154 N.J. Super. 576 (Ch. Div. 1977); Restatement (Second) Contracts, 222 (1981).
Model Civil Jury Charges
