A company that provided surrogacy services abroad had to compensate clients whose money was stolen by a third party. Despite his contractual obligation to bear part of the cost of the compensation, the middleman between the company and that third party refused to pay his share on the grounds that the compensation was not preapproved by him as required by the contract.
The Court rejected the middleman's arguments due to breach of the obligation to perform a contract in good faith. The principle of good faith applies the requirement to act in good faith also in relation to the performance of obligations and the use of rights arising from a contract, where one of the expressions of this principle is the prohibition to insist in bad faith on literal interpretation of a contractual right. When it comes to a stipulation in the contract that must be carried out to the satisfaction of a party to the contract, an arbitrary or blanket refusal to express satisfaction constitutes a bad faith use of the contractual right. Here, it is a contract that obligates the middleman to bear a part of the compensations, which will be agreed upon in the framework of a settlement agreement, but it is contingent on the preapproval of the settlement by him. However, the middleman categorically disclaimed all responsibility and even refused to examine any of the compromise proposals or take part in the negotiations with the customers, even though he knew that the company was forced to carry out the procedures with the affected customers. A blanket refusal to any settlement agreement without examining each case individually while abusing the veto given to him in order to avoid performing his contractual obligation to pay part of the compensation constitutes a bad faith use of a contractual right.