5/6/19 Satisfaction Guaranteed
A term in a sales or services contract in which the seller gives the buyer the sole and unilateral discretion as to whether or not the goods or services tendered are acceptable. In the event the price is not paid, no cause of action exists unless the buyer acting in good faith is satisfied, no matter how good the goods or services are in terms of quality.
Agreements containing a promise to perform in a manner satisfactory to another, or to be bound to pay for satisfactory performance, are a common form of enforceable contract.
Such satisfaction contracts are generally divided into two categories for purposes of review: contracts that involve matters of personal taste, sensibility, judgment, or convenience; and contracts that contain a requirement of satisfaction as to mechanical fitness, utility, or marketability.
The standard for evaluating satisfaction depends on the type of contract. Satisfaction contracts of the first type are interpreted on a subjective basis, with satisfaction dependent on the personal, honest evaluation of the party to be satisfied. The party to be satisfied is the sole judge of his or her satisfaction….
If the party to be satisfied asserts in good faith that he or she is not satisfied, there can be no inquiry into the reasonableness of his or her attitude. Absent language to the contrary, however, contracts of the second type – involving operative fitness or mechanical utility – are subject to an objective test of reasonableness, because in those cases the extent and quality of performance can be measured by objective tests.