QUESTION
Is this "bad faith" in negotiations?
Asked on Oct 22nd, 2015 on Breach of Contract - California
More details to this question:
3 companies were competing for ad space on our website. Each company offered different amounts. I took the highest amount, added 20% and told each company that the other companies offered the higher amount. One company agreed to the price and we signed a multiyear contract. Another one said the price should be fine but they need some time to think about it. The third company said no. A couple years into the contract, the company wants out because somehow they found out that I bluffed on the price the other companies offered. They are threatening to sue me for "bad faith" negotiations and to terminate the contract. Is this actually something they can do?
1 ANSWER
There is a concept of a claim for "bad faith" in negotiations, but only where there is a contract to negotiate in good faith, which sometimes happens when parties have an agreement in principle but have to iron out details, or have a fiduciary relationship with each other (e.g. a father negotiating with his son), or in some other, rare, situations. It doesn't sound like yours is one of those, but rather an arms' length commercial negotiation.
One caveat. I'm not that familiar with California law, but do know generally that California law is often less protective of equality in negotiations than are other jurisdictions. It is possible that California law is different.
Answered on Oct 23rd, 2015 at 11:56 AM