What Is a Bona Fide Error?
A bona fide error, a legal term stemming from Latin meaning ‘in good faith,’ refers to an inadvertent mistake or oversight that can be rectified promptly to avoid legal repercussions. The term ‘bona fide’ is commonly found in documents to signify that any errors present are unintentional and will be promptly addressed.
- A bona fide error, legally speaking, acknowledges an error while asserting that it was not intentional.
- In such instances, the burden of proof falls on the accused party.
- The accused entity must also demonstrate that it had reasonable procedures in place that should have prevented the error from occurring.
- In financial contexts, bona fide regulations are mandatory in specific merger documents, like the reverse triangle merger.
Understanding the Bona Fide Error
Including an exception for a bona fide error in a legal document acknowledges the inevitability of human errors. It illustrates a commitment to making a good faith effort in fulfilling agreements, ensuring any breaches are unintentional and correctable.
Bona fide errors can be used as a defense in legal matters. To successfully assert a bona fide defense, the accused party must prove that the error was not intentional.
Furthermore, the accused must substantiate that the error occurred despite the presence of reasonable preventive procedures.
Example of a Bona Fide Error
Enacted in 2010, the Fair Debt Collection Practices Act targeted what it deemed as “abusive, deceptive, and unfair practices” by debt collectors. The law outlines permissible collection practices and responses to complaints from debtors. If disputes escalate to court, debtors may need to prove misconduct by the collector.
In defense, a debt collector can cite a bona fide error, asserting that any violation was unintentional and counteracting with evidence of existing preventive measures.
A Case in Tahoe
In a notable case involving a Tahoe consumer, a debt collection agency’s application of the bona fide defense was dismissed by the Ninth Circuit Court of Appeals. The consumer contested a $614.52 medical debt invoice along with a $29.07 interest charge, citing a miscalculation.
The debt collector argued that the error was bona fide, acknowledging the miscalculation but the court ruled against them, highlighting inadequate procedures that should have prevented such errors. Resulting in the debtor prevailing in the case.