Orange County Business Litigation

Bad Faith & Unfair Business Practices

Bad faith ("mala fide" in Latin) is an attitude taken in actions or positions that involves rationalizing to form a belief in which there is deception, duplicity, insincerity, or dishonesty, due to failing to take certain facts into account or using invalid argumentation, which may be intentional or self deception. Faith is a strong or unshakable belief in something; bad faith is when this belief is misplaced, when good reasoning from facts should produce disbelief, but there is still a strong or unshakable persistence to continue with the belief as a faith. Bad faith exists when arguments for an act or position do not acknowledge known facts that show such an act or position to be wrong, but are put forth as being logical or otherwise valid, or believed in when it is not, or should not be.


In law, there are inconsistent definitions of bad faith, with one definition much more broad than used in other fields of study discussed in the above sections. Black’s Law Dictionary equates fraud with bad faith. But one goes to jail for fraud, and not necessarily for bad faith. The Duhaime online law dictionary similarly defines bad faith broadly as “intent to deceive”, and “a person who intentionally tries to deceive or mislead another in order to gain some advantage”.


Unfair business practices embraces fraud, misrepresentation, and oppressive or unconscionable acts or practices by business, often against consumers and are prohibited by law in many countries. Unfair business practices may arise in many areas, including tenancy matters, matters involving the purchase of products and services by consumers, matters involving insurance claims and the settlement thereof, and debt collection in cases of default.


At common law, individuals were not entitled to attorneys fees or punitive damages for wrongful acts committed by businesses in most states. Most often, laws prohibiting unfair business practices require the victims to send a demand letter to the business prior to commencing with a law suit. If the business fails to make a reasonable offer of settlement within a specified period of time, and is subsequently found liable in court, it may be liable for punitive damages and the injured parties reasonable attorney's fees under many statutes. In some instances, the statutes persuade plaintiffs to recover double or triple the actual damages against non-settling defendants.


When statutes prohibiting unfair business practices provide for the award of punitive damages and attorneys fees to injured parties, they provide a powerful incentive for businesses to resolve the claim through the settlement process rather than risk a more costly judgment in court.


Call or contact us today and rely on our Business Litigation attorneys who have extensive experience in bad faith and unfair business practices.



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