Employers Obligation to Render a Sincere Performance of Contractual Undertakings Before Extending Employee's Contract
Is an Employer Contractually Obligated to Render a Sincere and Substantial Performance of Contractual Undertakings Before Deciding Whether or Not to Extend the Employee's Contract ?
Baker v. Lafayette College, 350 Pa. Super. 68, 504 A.2d 247 (Pa. Super. 1986) involved a two-year employment contract between a college and a professor.
The college's faculty handbook, which was explicitly made part of the contract itself, obliged the college to conduct an honest and meaningful evaluation of the professor's performance before deciding whether or not to extend the contract beyond its original term. Baker, 504 A.2d at 255.
The Court affirmed the grant of summary judgment in favor of the college and held that the implied duty of good faith and fair dealing applied to this reevaluation provision. Id.
Thus, the college was contractually obligated "to render a sincere and substantial performance of these contractual undertakings, complying with the spirit as well as the letter of the contract." Id.
The Baker Court stressed that its holding was narrowly tailored to the facts of that case:
We emphasize that our holding is a narrow one.
This case does not present the more difficult issue whether an obligation of good faith and fair dealing should be implied into any employer-employee relationship, including at-will employment.
Consequently, we do not decide that issue.
The Court held only that when an employer such as the College here expressly provides in an employment contract for a comprehensive evaluation and review process, we may look to the employer's good faith to determine whether the employer has in fact performed those contractual obligations. Id.