Admitting he was "perhaps an unlikely legal illustrator," the Maryland Court of Appeals recently cited Jerry Seinfeld to illustrate the contractual and fiduciary duty of "good faith."
The case, Clancy v. King, is not especially notable otherwise, except maybe because "Clancy" is the author Tom Clancy. In 1992, Clancy and his wife Wanda formed a limited partnership to handle various book projects, including the "Tom Clancy’s Op-Center" books that you have likely seen and not purchased in airports. (If you are a fan of that series, you might or might not like to know that Clancy not only did not write but also "did not read . . . in any meaningful part, any of the books in the series.") The partnership became much more limited a few years later when the couple got divorced. Clancy decided he no longer wanted to contribute his name to the books he had nothing to do with, and Wanda argued that this breached his duty to the partnership. She won.
But on appeal, the court reversed. It found that Clancy had the right to withdraw his name, so long as he exercised his right in "good faith." And what does that mean?
[Seinfeld] once epitomized the duty of good faith in contract. . . . Jerry’s character purchased a jacket at a men’s clothing shop. The terms of the contract permitted Jerry to return the item for refund at his discretion. When Jerry attempted to return the jacket after an unrelated personal quarrel with the salesman, the following discussion took place.
Jerry: Excuse me, I’d like to return this jacket.
Clerk: Certainly. May I ask why?
Jerry: For spite.
Jerry: That’s right. I don’t care for the salesman that sold it to me.
Clerk: I don’t think you can return an item for spite.
Jerry: What do you mean?
Clerk: Well, if there was some problem with the garment. If it were unsatisfactory in some way, then we could do it for you, but I’m afraid spite doesn’t fit into any of our conditions for a refund.
* * *
Bob: What seems to be the problem?
Jerry: Well, I want to return this jacket and she asked me why and I said for spite and now she won’t take it back.
Bob: That’s true. You can’t return an item based purely on spite.
Jerry: Well, so fine then . . . then I don’t want it and then that’s why I’m returning it.
Bob: Well you already said spite, so . . . .
Jerry: But I changed my mind.
Bob: No, you said spite. Too late.
Seinfeld: The Wig Master (NBC original television broadcast 4 April 1996). In attempting to exercise his contractual discretion out of "spite," Jerry breached his duty to act in good faith towards the other party to the contract. Jerry would have been authorized to return the jacket if, in his good faith opinion, it did not fit or was not an attractive jacket. He may not return the jacket, however, for the sole purpose of denying to the other party the value of the contract.
The court also noted that Bob appropriately rejected Jerry’s claim that he just didn’t want the jacket, finding this "post hoc rationalization" by Seinfeld "not credible."