Fortune v. National Cash Register Co.
364 N.E.2d 1251 (Mass.1977)

Facts:
Fortune was a salesman at National Cash Register (NCR). The contract was terminable at will, without cause, by either party on written notice. Part of his contract included bonus commissions on products sold.

  • Right after landing a $5 million order for the company, he received a termination notice. However, NCR decided to keep him on temporarily so he could manage the order. He was fired 18 months later.
  • Fortune was only paid a portion of his commission and sued to recover the rest.

History:

  • The trial jury awarded Fortune $45,649.62.
    • NCR acted in bad faith, both when it initially decided to let Fortune go, as well as when it eventually did so.
  • The Appeals Court reversed.

Issue:
Whether this “bad faith” termination constituted a breach of the employment at will contract.

Holding:
Yes.

Reasoning:

  • In every contract there is an implied covenant that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract, which means that in every contract there exists an implied covenant of good faith and fair dealing.
  • Here, the evidence sustained a determination that NCR discharged Fortune in order to avoid paying certain bonuses to the him.

This case extended the implied covenant of good faith and fair dealing to employment contracts, but note that it has not received as widespread acceptance as some other developments in wrongful discharge (one can argue that the at-will doctrine is inherently inconsistent with good faith and fair dealing).