## Facts

- Brian Dalton took the SAT in May 1991 and again in November 1991; his combined score rose by 410 points, triggering ETS’s “discrepant score” review.
- ETS compared the answer sheets, found handwriting differences, obtained an examiner’s opinion that different individuals completed the tests, and preliminarily decided to cancel the November score.
- Dalton’s registration incorporated ETS’s Registration Bulletin, which allowed ETS to cancel scores it believed were of questionable validity, but also required ETS to notify the test-taker and provide options, including submission of additional information for Board review.
- Dalton submitted materials supporting the November score’s validity, including evidence of illness during the May test, prep-course results consistent with the November performance, witness statements about his presence and conduct, and a handwriting expert’s opinion that he wrote both answer sheets.
- The trial court found ETS did not make even a minimal effort to evaluate or investigate Dalton’s submissions and instead relied primarily on handwriting analysis questioning authorship of the November test.

## Issues

1. Whether ETS breached its contract by failing to exercise its contractual discretion in good faith when applying its score-cancellation procedures.
2. If ETS breached, whether the proper remedy was an order compelling release of the disputed score or an order requiring good-faith compliance with the contractual procedures.

## Decision

- The Court of Appeals held ETS breached the contract by failing to consider, in good faith, relevant information Dalton submitted under the procedures promised in the Registration Bulletin.
- The court agreed specific performance was an appropriate form of relief but modified the remedy.
- The court ruled the proper relief was to require ETS to perform the promised procedures in good faith, not to require ETS to release the questioned score as if validated.

## Legal Principles

- Every contract includes an implied covenant of good faith and fair dealing, barring conduct that deprives the other party of the benefit of the bargain.
- When a contract grants discretionary authority to one party, that discretion must be exercised non-arbitrarily and non-irrationally, consistent with good-faith performance.
- Where a party promises a procedure (including consideration of submitted materials), it must meaningfully consider relevant submissions when making its decision; failure to do so can constitute breach.
- Specific performance should approximate the effect of full contractual performance; it enforces the promised process, not a substantive outcome the contract did not guarantee.
- A contracting party’s failure to perform in good faith does not automatically entitle the other party to the contract’s most favorable substantive result when the contract only promised fair procedures.

## Conclusion

The court enforced the implied covenant of good faith by requiring ETS to carry out its contractual score-review procedures in a genuine, non-arbitrary way, but it refused to compel release of a disputed SAT score because the contract promised a fair process rather than a guaranteed result.


Dalton v. Educ. Testing Serv., 87 N.Y.2d 384 (N.Y. 1995)