Photo Credit: Zarco, Einhorn, Salkowski & Brito, P.A.
Robert Zarco, Founder of the law firm Zarco, Einhorn, Salkowski, & Brito, P.A., has been at the forefront of protecting the legal rights and interests of business clients in the USA and overseas for over 35 years, handling complex Franchise, Commercial, and Business legal matters and trials in Federal and State Courts, as well as Arbitration and Mediation. As a very aggressive Trial Lawyer in Franchise, Hospitality, Dealership, Distributorship, Trademark, Commercial and Real Estate disputes, Zarco is frequently awarded distinctions including “Order of Centurion Trial Lawyers Honor Society Fellow” by the Litigation Council of America; “Lawyer of the Year” in 2020 for Franchise Law by Best Lawyers of America©; “Top Dealmakers of the Year” for Real Estate/Land by Daily Business Review; “Legal Eagle” by Franchise Times; and “South Florida’s Top Lawyers” by Miami Herald. The Firm is repeatedly listed in U.S. News and World Report among “Best Law Firms Nationwide in Franchise Law” by Best Lawyers of America ©.
Zarco recently took the time out of his busy schedule to discuss important aspects of commercial agreements that may give rise to disputes and litigation.
Haute Lawyer: Can the legal covenant of Good Faith and Fair Dealing be waived in an agreement?
Robert Zarco: There are a lot of legal principles that exist in common law. Through the contracting between parties, these principles could be waived. And we have already seen, on several contracts that have come across our desk, instances where folks are trying to draft away the common law and the implied contractual provision of good faith and fair dealing. I think that it depends on the jurisdiction. Some states could deem that it is an unconscionable provision, and therefore, it would be unenforceable.
I am willing to tell you that there are many other states that would say that if the parties mutually and contractually agree, they do not have to act in good faith, which leads them to not doing so, and therefore will obliterate or eviscerate any chance of adding a cause of action for breach of the implied covenant of good faith and fair dealing.
To summarize, I believe the legal covenant of good faith and fair dealing will be enforceable if both parties agree, however, I would not recommend any party to a contract to agree to do away with the legal covenant of good faith and fair dealing.
HL: How does the “Non-Disparagement Clause” in an agreement pertain when it’s weighted against free speech?
RZ: Courts respect the sanctity of contractual agreements between parties. Non-disparagement agreements are deemed to be a material clause in a contract because of the existence of free speech. Free speech generally governs public communication. In other words, you can undertake free speech against the government, against the President or against people who are public figures. However, if that were the case, that very same free speech implied toward individuals would not grant you cause of action for defamation, libel or slander. Because typically, a person would sue for either of the three (defamation, libel, slander) when they believe someone has said something negative toward them. One could reply and say, “Yeah, but it’s free speech.” Well, it’s not free speech, because there are private people’s rights and reputations that need to be protected.
When people get into a lawsuit, there is typically a lot of adversity and a lot of bad blood between them. It is natural that at the end of the lawsuit, someone will say something bad about the other party and disparage them. So often times, the reason people end up settling is because they are sick and tired of that person trashing them in the public sphere and want to end it quickly. In today’s world, this is especially due to the power of social media. With the stroke of a key on a laptop, or a phone, you could trash someone’s reputation quickly and broadly.
As a result, non-disparagement clauses are enforceable and they are commonly used. Courts recognize them and courts enforce them if those provisions exist in agreements between the parties, especially, in situations where there is a settlement where one party provides consideration for the other parties. In this case, there would be several mutual non-disparagement clauses contained in such contracts, and these clauses are in fact enforceable, regardless of first amendment rights. I always recommend parties to a contract to obtain a reputable and experienced lawyer to advise and review early and throughout the process. Most times, the results are only as good as the lawyer.
Photo Credit: Zarco, Einhorn, Salkowvski & Brito, P.A.
