Development of the Covenant of Good Faith and Fair Dealing: A Bank's Duty to Set NSF Fees in Goof Faith Note 29 Willamette Law Review 1993

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29 Willamette L. Rev. 597 (1993)
Development of the Covenant of Good Faith and Fair Dealing: A Bank's Duty to Set NSF Fees in Goof Faith

handle is hein.journals/willr29 and id is 607 raw text is: NOTE
WILLAMETTE LAW REVIEW
29:3 Summer 1993
DEVELOPMENT OF THE COVENANT OF GOOD
FAITH AND FAIR DEALING: A BANK'S DUTY TO
SET NSF FEES IN GOOD FAITH
BENJAMIN B. GRANDY*
I. INTRODUCTION
One of the more significant departures from classical contract
law has been the emergence and acceptance of the view that in
every contract there exists an implied covenant of good faith and
fair dealing.' However, despite the concept's modem importance,
courts have yet to articulate a clear and workable definition of good
faith.2
The Oregon Supreme Court, in Tolbert v. First National Bank
of Oregon,3 held that the First National Bank of Oregon had set its
nonsufficient funds (NSF) fees' in good faith.5 The decision, while
* Second-Year Student, Willamette University College of Law.
1. The modem emergence and recognition of the good-faith doctrine is a develop-
ment of the increasing appreciation of individual rights, a more restrained appraisal of
property rights, and a broader concept of social duty. Eric M. Holmes, Is There Life After
Gilmore's Death of Contract?-Inductions From a Study of Commercial Good Faith in First-
Party Insurance Contracts, 65 CORNELL L. REV. 330, 332 (1980).
2. See Eric M. Holmes, A Contextual Study of Commercial Good Faith: Good-Faith
Disclosure in Contract Formation, 39 U. PiTT. L. REV. 381, 400-02 (1978).
3. 312 Or. 485, 823 P.2d 965 (1991).
4. An overdraft results when a bank pays a check drawn by a depositor who does not
have enough money on deposit. HENRY J. BAILEY & RICHARD B. HAGEDORN, BRADY ON