Issue

Covenant of good faith and fair dealing—consumer agreement—unilateral changes—arbitration amendment—relation back to original contract—contract not rendered illusory

Summary

A credit union's unilateral changes, with notice, to a standard membership contract (which contained a change-of-terms provision) to require arbitration for certain disputes and to waive members' right to file a class action suit were enforceable because they did not violate the implied covenant of good faith and fair dealing inherent in contracts where the changes reasonably related to the universe of terms, including those that related to dispute resolution, that existed in the original contract. Further, the change-of-terms provision that permitted unilateral modifications did not render the contract illusory since the implied covenant of good faith and fair dealing acted as a sufficient check on the credit union's power to modify the contract. Finally, a member's argument that the arbitration amendment was unenforceable without her mutual assent had no merit where she gave her assent to the credit union's ability to make changes with notice when she entered into the original contract that contained the change-of-terms provision.

Summary from the North Carolina Reports digest (official subject index). Read the opinion →