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Simple English definitions for legal terms

duty of good faith

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A quick definition of duty of good faith:

The duty of good faith is a rule that says people who make decisions for a company must do so with honesty and responsibility. They cannot make choices that benefit themselves instead of the company. Breaking this rule can happen if someone ignores their duties, acts for their own benefit, or breaks the law on purpose. Even though shareholders cannot sue for breaking this rule, it can still be a problem if it goes against the duty of loyalty. The Uniform Commercial Code also says that every contract or duty must be done with good faith.

A more thorough explanation:

The duty of good faith is a principle that requires directors and officers of a corporation to act with a conscious regard for their responsibilities as corporate fiduciaries. This means that they must act honestly and in the best interest of the corporation when making decisions.

Examples of violating the duty of good faith include:

  • Intentionally neglecting the usual duties of a director or officer
  • Acting for a purpose other than the benefit of the corporation
  • Intentionally violating the law

For instance, if a director of a company decides to award a contract to a friend's company instead of the one that offers the best value to the corporation, they would be violating the duty of good faith.

It's important to note that there is no private shareholder right of action for a violation of the duty of good faith. However, its violation may also raise a claim under the duty of loyalty.

The Uniform Commercial Code section 1-304 also provides that every contract or duty within the Uniform Commercial Code imposes an obligation of good faith in its performance and enforcement. This means that parties to a contract must act honestly and fairly when performing and enforcing the terms of the contract.

duty of care | duty of loyalty

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got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
WorthlessAttractiveZombie
7:44
My berkeley paragraph finally disappeared. I definitely think it is just an indicator that they are actively reviewing files, and does not mean anything about A, WL, or Rs
WorthlessAttractiveZombie
7:46
Also has anyone's date disappeared for W&L? Mine did last night
7:55
@WorthlessAttractiveZombie: mine did yesterday morning
7:56
Oops sorry I meant Vilanova. Mine disappeared last week
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