Definition of Bona Fide
Part of the term’s complexity stems from its frequent use in financial documentation and due diligence. Parties involved in transactions, contracts, or agreements of all kinds often need to ensure that information is provided fully and transparently, with no hidden risks. On these occasions, the language of bona fide appears.
Legal instances of bona fides ("good faith") trace their origins to Roman civil law, where contracts involving good faith are accompanied by an expectation that parties will act honestly. This tradition has been absorbed into numerous modern legal systems around the world. The full translation of bona fides is "Good Faith," and the term has played a significant role in contract law for centuries.
Within contract, tort, and other areas of law, the bona fide standard is typically associated with behavior. Bad faith in a legal sense is typically associated with an absence or concealment of material facts, or deliberately misleading actions or omissions designed to take advantage of another party.
Bona Fide as a Legal Benchmark
Bona fide is not simply a subjective phrase sprinkled throughout litigation and government decisions: it is often defined by the codes and statutes of a given jurisdiction. How it is interpreted varies in form and function across different jurisdictions.
For instance, the United States Internal Revenue Code (IRC) outlines many instances of bona fide usage. A bona fide purchaser of property like real estate for example is one who has no notice of other claimants on the property . In this case it is colloquially referred to as "a bona fide purchaser without notice."
Whether as a purchaser, a broker, or some other party to a transaction, bona fide acts are also described as honest, fair, and legitimate in civil and criminal court decisions. This standard is also applied in governmental settings: bona fide claims and standards can determine availability of benefits.
Bona fide claims for eligibility, especially in commercial situations, often require factual proofs of a non-speculative nature. Such proof typically must show adequate verification of efforts in support of claimed objectives.
In some jurisdictions, the bona fide standard appears regularly before adjudicating courts, regulatory commissions, boards, and commissions. For example, it may appear in numerous contexts in public utility commission matters. In such venues, bona fide typically requires all records and materials in support of bona fide claims and standards to be maintained for a minimum verifiable time period.
For example, a federal statute overseeing interstate water commerce, 9 U.S.C. § 1 et seq. (1974), uses the phrase bona fide usage several times to refer to "genuine (i.e., rather than smoke-and-mirrors) usage of waterways at a point best known by the shipper."
Restatements of the Law, Restatement 2d, and other authoritative documents regularly use the phrase bona fide in a variety of legal disciplines.
Bona Fide Purchase Definition
Some of the more common ways to take property free and clear of a lien are to take as a bona fide purchaser or in a commercial transaction. "The term "bona fide purchaser" denotes one who, in good faith, for value, and without notice, buys a legal or equitable interest in property which is extended and acted on." Fatima, C.A. 15-2762 (April 11, 2016). There are four elements to a bona fide purchaser, specifically: (1) a person of ordinary prudence; (2) purchasing property; (3) in good faith; and (4) without notice. An example of a bona fide purchaser for value is where a bank loaned the money and took a mortgage on a property. If the spouse who was not a party to the mortgage only owned the property in a tenancy by entireties and the mortgage was for the benefit of the marriage, the mortgage still attached despite the unjoined spouse not having signed the mortgage deed. In such case, also, a foreclosure by the mortgagee would require both persons to be joined in the suit, otherwise the foreclosure sale was voidable. In equity, the doctrine protects a purchaser who buys without notice of any defects in title; he pays no attention to whatever knowledge the vendor may have had. A bona fide purchaser will not lose his right in property simply because the vendor may have committed a fraud in the transaction. A purchaser who had notice of the claim could not complain that one without notice had the same notice posted to him. Thus, the bona fide purchaser for value without notice takes subject to the ‘secret equities’ of others.
Bona Fide Occupational Qualification
In all three of the areas of "bona fide" that are most commonly encountered, the exceptions are narrow. A "bona fide occupational qualification" is an example of just such an exception and allows an employer to discriminate in the hiring process if membership in a particular category is an essential job requirement. To rely on a BFOQ, employers must establish that the qualification is necessary to the essence of the business. Examples of legitimate BFOQs include: hiring only actresses for a part where intimate exposure is required in the plot; employing only women as attendants in a women’s locker room; and requiring men to work in a men’s restroom. The Supreme Court has warned that BFOQs should be treated cautiously because they are an exception to the rule and reasonably precise standards for the qualification must be established.
Definition of Bona Fide Intent
Bona fide intent is also a term commonly used in trademark law to determine whether a bona fide intention to use a mark exists for purposes of determining whether or not an opposition should be granted or a registration refused on the ground that the application was not made in good faith for the purpose of use of the mark in Canada at the time of filing. "Bona fide intention" refers to "a good faith intention to use the mark in association with the goods and/or services of the applicant at some point in the reasonably near future." "Not merely a plan, an idea or a possibility" but a "real, ascertained" intention .
Bona fide intention to use a mark in Canada at the time of filing an application is a statutory requirement for filing a use-based application and there is no requirement anywhere that a statement that a bona fide intention exists, although it is the standard the Office will apply in reviewing such a statement.
Evidence of a bona fide intention to use is measured against objective and subjective factors including evidence of preparatory steps taken by the applicant in relation to the product or service and a detailed business plan. However, such evidence may not be sufficient to satisfy the "intention to use" requirement of good faith. Evidence of third parties’ intent vis-à-vis the applicant can also be brought forward by the Opponent and must be weighed against the applicant.
Bona Fide Attempt to Establish a Relationship or Status
In the realm of immigration law, a ‘bona fide relationship’ is of paramount importance, particularly when it comes to K-1 visas (the fiancé visa) or removing the condition of permanent residency. While the mere existence of an established relationship is typically what is being looked for, it is important that the relationship be geared toward a genuine commitment and not solely for the sake of legal immigration status. The focus is not necessarily on how long this relationship has existed or been in effect, but the nature of interpersonal touches between parties may lend credence to the main event, which is the perceived legality of the union.
As a general rule, there is an expectation that parties involve in immigration situations will have filed additional documentation besides the application. This means additional circumstantial evidence, such as shared bank accounts, shared health care, joint leases, insurance, taxes, wills and more. Examples of its use follows: The lawyers at Rabinovici & Associates can assist you with the process of filing the necessary documentation and presenting your case in immigration hearings.
Proving Bona Fide
There are distinct challenges and complexities in proving an individual’s or entity’s ‘bona fide’ status. Legal practitioners and their clients often face hurdles in gathering substantial proof or evidence that firmly establishes this status. This is particularly true in immigration law, as many visas require clear and convincing evidence that a business or investor visa applicant and the entities they are investing in or established are ‘bona fide’ (not fraudulent and predominantly legitimate). In instances where the appeal of an issue related to the statute of limitations is implicated, showing ‘bona fide’ status may also be essential.
Remedies available to organisations if "bona fide" status is not granted can be considerable. An injunction may be sought as to the patent examination process; a declaration that the patent has been abandoned, that the reissued patent is unenforceable or invalid, and/or a declaration that the defendant has no rights in the reissue patent and is not entitled to damages; and an award of costs. It is worth considering whether injunctive relief should be sought, or whether other remedies may be preferable.
Generally, the evidentiary requirements common in proving "bona fide" status typically include, but are not limited to: tangible proof of the beneficiary of bona fide status having a certain amount of assets or income, and these assets or income having been maintained for a specific period of time, and/or documentary proof of the individual’s (or entity’s) residency, occupation, or marriage. Many challenges in proving ‘bona fide’ status often relate to the language of legislation, as display of ‘bona fide’ status is often tied to confusing legal wording. For example, in sections 1317HA(1) and 1317G(2), the language of the Corporations Act 2001 (Cth) basically outlines that only a "bona fide purchaser" can take property from a company in liquidation .
Recent case study: Shafaq v Minister for Home Affairs [2016] AATA 935 typifies much of the aforementioned challenges and proves that often the heart of proving ‘bona fide’ status lies in the evidence supporting the existence of it. Here, Mrs Shafaq (the Appellant) was in the business of owning and operating successful café businesses. Her first business was a café named in her name on Old Canterbury Road (the Burwood Café). She had 100% shareholding in that café, with a different manager operating it. She then purchased a second café in Avoca Street, Surry Hills (the Surry Hills Café), soon after selling the Burwood Café to Mr Wise, a family friend. When the Appellant sold the café, under the Agreement for Sale, part of the sale proceeded as follows::
The Appellant’s then manager had owned shares in the Burwood Café at the same time as the Appellant, but did not in fact hold any shareholding in any company. The Appellant did not receive the $60,000 due to the liquidators. The respondent found that she was an insolvent, uncommercial preference under the Burwood Café’s Agreement for Sale, and made a determination that Mrs Shafaq was liable to repay the money sought by the liquidators. Appeal dismissed and the decision affirmed.
The case study demonstrates that the legal evidentiary requirements in the Corporations Act 2001 (Cth) were not met here and also demonstrate the burdensome efforts of individuals to try to prove otherwise. If the Act provides an exhaustive list of examples or definitions, such as what a ‘purchaser’ may include/narrow down the scope of individuals/entities that may be eligible for ‘bona fide’ status and its benefits, and if the practical requirements are hard to meet, results can be devastating on individuals and their dependants.