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step with industry norms, this fact is generally strong indication that the party acted in bad faith. [ See Allapattah Svc’s, Inc. v. Exxon Corp. , 61 F.Supp.2d 1308 (S.D. Fla. 1999).]
c. Good Faith and Discretion to Set Contractual Terms Issues of good faith often arise if the contract affords one party discretion to set some relevant term, such as the price. Here, the party must act honestly and reasonably, exercising its discretion in good faith and not arbitrarily, vindictively, discriminatorily, or with some other oppressive or exploitative motive. In this vein, if a seller has identical pricing provisions in its contracts with multiple buyers, bad faith will normally exist if the seller charges one buyer more than another for arbitrary or discriminatory reasons. [ Allapattah Svc’s, Inc. v. Exxon Corp. , 61 F.Supp.2d 1308 (S.D. Fla. 1999).] Example : An oil supplier asked its dealers to implement a tiered pricing system for gasoline, in which customers paying with cash would be charged less than those paying with credit or debit cards. Most dealers complied, but some did not. The supplier’s contracts with its dealers permitted the supplier to set the price of gasoline at its discretion, considering various market-based factors. Invoking this discretion, the supplier started charging more for the gasoline it sold to dealers who did not implement the tiered pricing system, with a view to either coax compliance or force the noncompliant dealers out of business. Charging with such a motive was out of step with industry norms. Here, the supplier likely acted in bad faith. Though the contract afforded the supplier discretion to set the price, the supplier set the price with an arbitrary, discriminatory, vindictive motive that defied the dealers’ justified contractual expectations. [ See 2 Anderson U.C.C. § 2-103:51 (3d. ed.), Westlaw (database updated Dec. 2020) (discussing Allapattah Svc’s, Inc. v. Exxon Corp. , 61 F.Supp.2d 1308 (S.D. Fla. 1999).] 4. Receipt In UCC Article 2, receipt of goods means taking physical possession of the goods. [U.C.C. § 2- 103(1)(c) (1951).] 5. Merchant In UCC Article 2, a merchant is one who deals in the kind of goods that are the subject of the transaction. That is, a merchant is one in the business of selling goods of that kind, or one who regularly sells those goods. Alternatively, a merchant otherwise, by her occupation, holds herself out as possessing knowledge or skills peculiar to the goods or the practices involved in the transaction. Even if a person lacks such knowledge or skills, they may be imputed to her if she employs an agent or broker who, by his occupation, holds himself out as having that
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