Definition
Good will is the intangible value of an established business that exceeds the worth of its physical assets — the accumulated benefit of reputation, customer loyalty, trade name recognition, and location that causes customers to return and new customers to seek out that business over competitors. It is the reasonable expectation that existing patronage will continue.
Good will is treated as property. It can be bought and sold, transferred as part of a business sale, assigned in bankruptcy, and valued for tax and partnership dissolution purposes. Its core legal significance lies in three contexts:
1. Business sales and transfers: When a business is sold, good will is a distinct transferable asset. A seller who conveys good will may be restrained from immediately setting up a competing enterprise that would destroy the value just sold, provided any such covenant not to compete is reasonable in scope.
2. Partnership dissolution: Upon dissolution of a partnership, good will must be accounted for as part of the firm's assets. Disputes over its valuation and allocation are a recurring source of litigation.
3. Valuation in litigation: Courts must assign a monetary value to good will in divorce proceedings involving business-owning spouses, estate administration, eminent domain takings, and shareholder disputes.
Common Language
Modern common usage (Wiktionary): Alternative form of goodwill — used interchangeably with goodwill in general English, denoting friendly, cooperative, or benevolent feeling toward others.
Historical common usage (Webster's 1913): Benevolence; kindly feeling; friendly disposition; also, hearty consent or willingness.
The gap between common and legal meaning is sharp. In ordinary English, good will describes a disposition — a feeling of friendliness or benevolence. In law, good will is a species of property with ascertainable monetary value. A lawyer speaking of good will in a business sale is not describing anyone's emotional state; they are identifying a transferable asset that may be worth substantially more than all the tangible property of the enterprise combined. Researchers encountering the term in historical documents must determine from context whether the author means the asset or the sentiment.
Common Confusion
Good will is sometimes confused with trade name or trademark, but these are distinct assets that may contribute to good will without being identical to it. A trade name or mark is a specific legal right in a symbol or designation; good will is the broader commercial advantage to which that mark may contribute. Good will is also distinct from mere business opportunity — it requires an established pattern of patronage, not just the potential to attract customers.
In historical sources, good will is occasionally treated as purely personal (attaching to the individual proprietor) or purely local (attaching to the premises). Modern law generally recognizes that good will may have both personal and locational components, and courts have rejected a rigid either/or categorization. Researchers should be cautious when historical authorities assert an absolute rule on this point.
Why It Matters in Research
The spelling varies between sources and eras. Historical dictionaries and older case reporters use the two-word form good will almost exclusively. Modern statutes, accounting standards, and judicial opinions frequently use the single-word goodwill. Search strategies must account for both forms, and corpus search tools that do not normalize spelling will miss results.
The question of whether good will is personal or local — attaching to the proprietor versus the premises — was actively contested in nineteenth-century case law and produced conflicting results across jurisdictions. Researchers tracing the evolution of this issue will find that early authorities often take categorical positions that later courts quietly abandoned in favor of a facts-and-circumstances analysis. Bouvier flags this tension directly by citing conflicting holdings without resolving them.
Covenant not to compete doctrine is inseparable from good will research. The validity of a seller's promise not to compete is historically tied to whether the covenant is necessary to protect the good will being conveyed. Unreasonable restraints on trade were void; reasonable ones, ancillary to a legitimate good will transfer, were enforceable. The line between the two generated extensive litigation. Researchers studying restraint of trade must understand good will as the underlying asset that justified the restriction.
In partnership contexts, good will valuation problems are acute because the asset is inherently difficult to quantify. Historical partnership treatises — Story on Partnership being the primary authority cited in the period dictionaries — provide the foundational framework, but later uniform acts and accounting conventions substantially modernized the analysis.
Employment law researchers should note that good will, while primarily a commercial property concept, has relevance in employment contexts involving non-compete agreements, trade secret protection, and the duty of loyalty. The encyclopedia cross-reference above addresses the good faith and fair dealing dimension.
Historical Dictionary Support
Burrill, Bouvier, and Rapalje & Lawrence agree on the core definition: good will is the benefit arising from an established business's patronage — the probability that existing customers will continue doing business with the enterprise. All three emphasize that the value lies in anticipated continuity of custom, not in any tangible asset.
Bouvier provides the most detailed treatment, addressing the personal-versus-local debate, the connection to covenants not to compete, and the requirement of reasonableness for such covenants to survive. Rapalje & Lawrence's entry is useful for its explicit inclusion of trade mark and trade name as contributing sources of good will value, reflecting the growing commercial significance of those rights by the late nineteenth century.
What the historical dictionaries do not address is the modern accounting and tax treatment of good will as a separately amortizable intangible asset, or the valuation methodologies courts now employ in divorce and eminent domain proceedings. Researchers working in those contexts will need to move beyond the period dictionaries to statutory and regulatory sources.
Jurisdictional Note
Valuation methodology for good will varies significantly by context and jurisdiction. Several states distinguish between enterprise good will (transferable, divisible marital property in divorce) and personal good will (tied to the individual's reputation and skill, not divisible). This distinction is outcome-determinative in family law matters and is not reflected in historical dictionary definitions, which predate the doctrine.
Encyclopedia Cross-Reference
The Duty of Good Faith and Fair Dealing in Employment — The Law Mind Employment & Labor Law Encyclopedia (relevant to the intersection of good will, non-compete covenants, and employee loyalty obligations)