This short video explains the Michigan Supreme Court’s decision in Kircher v. Boyne USA and why it changed how business owners should think about claims based on the implied covenant of good faith.
What this video covers
- Michigan courts enforce clear, unambiguous contract language as written
- A breach claim must be tied to a specific obligation in the contract
- Using discretion the contract expressly grants is not a breach just because it hurts the other side
- The implied covenant of good faith is narrow and cannot override express terms
Can you still sue under the implied covenant of good faith in Michigan?
The video’s short answer is that you generally cannot use the implied covenant to succeed on a claim the contract itself does not support. The companion article explains that the case involved a commercial agreement that gave one party discretion affecting the other party’s economic interests. The plaintiff argued that the way that discretion was used breached both the contract and the implied covenant of good faith. The Court focused on the contract’s text and reaffirmed that courts will not rewrite agreements or add duties the parties did not include.
For businesses, the practical lesson is in the drafting. The article notes that without contract language setting objective standards or limits, courts will not impose their own. If you want limits on how the other side can use its discretion over pricing, performance, or termination, put those limits in writing.
Read the full article: Commercial Contract Litigation in Michigan: Best Practices After Kircher v. Boyne USA, Inc.
If you are negotiating a commercial contract or facing a dispute over one, contact Tishkoff PLC through our contact page or call 734.663.4077.
This video and page are for general informational purposes and do not constitute legal advice. Watching the video or reading this page does not create an attorney-client relationship. You should consult counsel for advice on your specific circumstances.