first introduced by the Uniform Commercial Code (UCC) for contracts relating to the sale of goods

and is now recognized by most American jurisdictions. U.C.C. § 2-103(1)(b) (“‘Good faith’ in the case
of a merchant means honesty in fact and the observance of reasonable commercial standards of fair
dealing in the trade”); Steven J. Burton, Breach of Contract and the Common-law Duty to Perform in
Good Faith, 94 Harv. L. Rev. 369 (1980). It is commonly understood that one of the primary functions
of this implied duty is to prevent one party from injuring the right of the other to receive the
benefits of the agreement between them. New Plumbing Contractors Inc. v. Nationwide Mut. Ins.
Co., 9 Cal. Rptr. 2d 469 (Ct. App. 1992); Onderdonk v. Presbyterian Homes of N.J., 85 N.J. 171, 182
(1981). The express terms of a contract can preempt or define the scope of this duty by explicitly
allowing conduct that would otherwise be a violation. See VTR Inc. v. Goodyear Tire & Rubber Co.,
303 F. Supp. 773 (S.D.N.Y. 1969). Furthermore, the obligation derived from this rule cannot alter the
express terms of the contract or deprive a party of its bargained-for rights. See Nat’l Westminster
Bank N.J. v. Lomker, 649 A.2d 1328 (N.J. Super. Ct. App. Div. 1994), cert. denied, 663 A.2d 1361 (N.J.
1995). The law of contracts does not require this principle to be applied to the process of contract
negotiations, although remedies for bad-faith negotiations may be found in the law of torts or
restitution, or within specific statutory frameworks such as the National Labor Relations Act. See
Restatement (Second) of Contracts § 205 cmt. c. The principle spelled out here is announced in the
Restatement (Second) of Contracts § 205 and augmented by definitions in U.C.C. §§ 1-201(19), 2-
103(1)(b).

4.03 Duty to Cooperate and Not to Hinder Construction Work

The law holds that the owner has an implied duty not to obstruct, hinder, or delay the project. An
owner breaches a contract when its actions unreasonably obstruct, hinder, or delay the contractor’s
work.

The contractor claims that the owner breached the contract because its actions interfered with the
contractor’s ability to perform the work. To establish this claim, the contractor must prove all of the
following:

(1) The contractor and owner entered into a contract. (2) The contractor did all, or substantially
all, of the material things required by the contract (or was excused from having to do those
things). (3) All conditions required for the owner’s performance had occurred (or were
excused). (4) The owner interfered with the contractor’s work in a way that was
unreasonable. (5) The contractor was damaged by the owner’s conduct.
(2) may be erected.” See Guerini Stone Co. v. P.J. Carlin Constr. Co., 248 U.S. 334, 340 (1919). A
breach of the implied duty not to hinder or obstruct a subcontractor’s performance also
occurred in Quaker Empire Construction Co. v. D.A. Collins Construction Co., 542 N.Y.S.2d
692 (1982), when the general contractor provided erroneous field measurements to a
subcontractor and failed to perform timely preparation work necessary before the
subcontractor could start its work. Due to these delays, the subcontractor recovered the
extra expenses incurred for working in winter weather. These expenses would not have
been incurred absent the contractor’s delays and the contractor’s insistence to work during
winter (to avoid owner-assessed liquidated damages). Additional cases in which the implied
duty was breached include the following: Paliotta v. Dep’t of Transp., 750 A.2d 388 (Pa.
Commw. Ct. 1999) (owner interfered with contractor’s planned method of construction
when it represented that utility poles would be removed to facilitate curb and gutter work—
but this proved incorrect, prompting contractor to request pouring the curb gutters behind
the utility poles, which was denied by the state, requiring the contractor to switch to more
costly method of construction); Volentine & Littleton v. United States, 169 F. Supp. 263 (Ct.
 Cl. 1959) (interference caused when owner raised water level at jobsite by closing upstream
dam); Lester N. Johnson Co. v. City of Spokane, 588 P.2d 1214 (Wash. Ct. App. 3d Div. 1978)
(after heavy rains, owner’s pumping raw sewage into field uphill from jobsite was
interference when sewage ran downhill into construction zone, causing delays); City of
Seattle v. Dyad Constr. Inc., 565 P.2d 423, 434 (Wash. Ct. App. 1st Div. 1977) (“City arbitrarily
and without justification directed the manner and method of the contractor’s performance
insofar as the installation of the sheet piling was concerned, and that the effect of this
improper interference of the City was to materially increase the scope of the work required
of the contractor and delay his operations in that regard.”).

Comment

Because the spirit of contracting between an owner and a contractor recognizes that a contractor
prices and schedules a construction project based on expedient progress of the work, an owner is
found responsible for increased costs and time to complete the work if it unreasonably interferes
with the contractor’s work. Unless contract language expressly provides that the contractor will be
responsible to complete the work on time without regard to costs, delays, or impacts to the work,
the contractor may recover additional relief or compensation for any delays or damages caused by
any breach of this implied term. See U.S. ex rel. Williams Elec. Co. v. Metric Constructors, 480 S.E.2d
447 (S.C. 1997); Bignold v. King Cnty., 399 P.2d 611 (Wash. 1965).

“The contracting party impliedly obligates himself to cooperate in the performance of his contract
and the law will not permit him to take advantage of an obstacle to performance which he has
created or which lies within his power to remove.” Gulf M&O Ry. Co. v. Ill. Cent. Ry. Co., 128 F. Supp.
311, 324 (N.D. Ala. 1954), judgment aff’d, 225 F.2d 816 (5th Cir. 1955). “It is sufficiently obvious that
a contract for the construction of a building, even in the absence of an express stipulation upon the
subject, implies an essential condition that a site shall be furnished upon which the structure