Breach of Contract: The Duty of Good Faith and Fair Dealing in Commercial Contracts


The Tennessee Supreme Court recently addressed an important issue of first impression in Tennessee: whether the implied covenant of good faith and fair dealing applies to a silent consent provision regarding the assignability of a commercial contract. Dick Broadcasting Co., Inc. of Tennessee v. Oak Ridge FM, Inc., E2010-01685-SC-R11-CV (Tenn. Jan. 17, 2013). In this case, the plaintiff, Dick Broadcasting Co., Inc., entered into three contracts with the defendants, Oak Ridge FM, Inc., ComCon Consultants and John W. Pirkle, relating to the programing of a radio station in Oak Ridge, Tennessee. Thereafter, the plaintiff decided to sell all of its assets to Citadel Broadcasting Company for $300 Million. As part of this transaction, the plaintiff sought to assign its contracts with the defendants to Citadel.  One of the contracts, a Right-of-First-Refusal Agreement, contained a so-called “silent consent clause.” In other words, the contract provided that consent to the assignment was […]

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Construction Law: The Scope and Limits of a Commercial General Liability Policy


If you are a residential contractor, you know that claims for defective construction are far too common. If faced with such a claim, you likely expect your general liability insurer to defend you. Unfortunately, there are instances where coverage may not apply or the right to a defense under your commercial general liability policy may not exist. Moreover, as demonstrated in a recent opinion by the U.S. Court of Appeals for the Sixth Circuit, insurers sometimes misinterpret defective construction claims and then mistakenly or wrongfully refuse to provide a defense to their insured. In Forrest Construction, Inc. v. The Cincinnati Insurance Company, 3:09-cv-1036 (6th Cir., Jan. 11, 2013), the Sixth Circuit clarified the duty of an insurer to defend under a commercial general liability policy. The facts of this case are straightforward. The plaintiff, Forrest Construction, Inc., a residential general contractor, maintained a commercial general liability (“CGL”) policy with Cincinnati Insurance […]

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EEOC Adopts Agressive Strategic Enforcement Plan


The U.S. Equal Employment Opportunity Commission recently issued its Strategic Enforcement Plan for 2013-2016. The EEOC is the federal agency responsible for enforcing federal laws prohibiting employment discrimination on the basis of race, color, religion, sex (including pregnancy), national origin, age, disability, or genetic information. As part of its new strategic plan, the EEOC adopted the following as national enforcement priorities: 1. Eliminating Barriers in Recruitment and Hiring. The EEOC will target class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women, and people with disabilities. 2. Protecting Immigrant, Migrant and Other Vulnerable Workers. The EEOC will target disparate pay, job segregation, harassment, trafficking and discriminatory policies affecting vulnerable workers who may be unaware of their rights under the equal employment laws, or reluctant or unable to exercise them. 3. Addressing Emerging and Developing Issues. The EEOC will target emerging issues in equal employment […]

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Damages: Pre/Post Judgment Interest in Tennessee


In Tennessee, pre-judgment interest may be an important element of damages in lawsuits involving breach of a contract. In these types of lawsuits, pre-judgment interest may be awarded as an element of damages. The rationale for this award is that when a party has breached a contract, the other party has loss of the use of funds due to the other party’s breach or failure to pay an obligation according to the terms of the contract. In order to compensate for this loss, the courts will often allow pre-judgment interest as part of the damage award (also known as “delay damages”). Because litigation can sometimes take years to complete, pre-judgment interest can quickly accrue and become a significant component of damages. As is often the case with an award of attorney’s fees, the allowance of pre-judgment interest is within the discretion of the trial court. Trial courts generally have the […]

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My Business Has Been Sued, Now What?


If you are a business owner, you probably have been sued, threatened with a lawsuit or fretted over the potential for a lawsuit. In our increasing litigious environment, it is not a matter of if you will be sued; it is a matter of when. For the fiscal year 2011, there were nearly 300,000 civil lawsuits filed in federal district courts in the United States. For the fiscal year 2010-2011, there were over 125,000 lawsuits filed in the chancery and circuit courts in Tennessee. This is the latest data as the statistics for the fiscal year 2011-2012 have not yet been released. Also, this data does not include the thousands of suits filed in the general sessions (small claims) courts in Tennessee each year. Many businesses often find themselves mired in collection disputes with customers, contract clashes with vendors, and employment quarrels with current or former employees. While these are […]

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