Also known as: implied covenant of good faith and fair dealing · implied covenants of good faith and fair dealings · covenant of good faith and fair dealing · good faith and fair dealing
Written by attorneys · grounded in primary & secondary sources — see below
A contractual duty requiring each party to perform and enforce the agreement honestly and in a manner that does not deprive the other of the expected benefits.
Imperial Motors chartered a vessel from Interlink Communications for multiple voyages. Interlink repeatedly chose cheaper routes and minimal maintenance that caused repeated late arrivals and triggered penalties for Imperial Motors. The pattern deprived Imperial Motors of the timely performance central to the charter bargain.
Ines Ibarra, Marco Iqbal, and Idina Iverson formed a partnership to manage comedian bookings. Their agreement declared any solo sponsorship automatically in good faith if the partner's social-media score rose, even when the deal undercut partnership leverage. The clause attempted to eliminate meaningful review of self-interested conduct.
Select any source to read its text and confirm it supports the definition.
Ironwood Capital formed Apex Credit LP with Martin as managing general partner. The agreement stated any conflicted transaction was conclusively in good faith once approved by a committee Martin alone appointed. Martin used the committee to approve loans to entities he secretly controlled.
India Inoue contracted with Ironclad Industries to supply custom parts. When market prices rose, Ironclad threatened to stop deliveries unless Inoue agreed to a higher price. The threat constituted a breach of the duty of good faith and fair dealing under the existing supply contract.
Isaiah Ishikawa and Ingrid Innes formed a partnership to operate coastal charters. Ishikawa departed on a voyage despite a severe-weather forecast and an inoperable backup radio, causing major vessel damage. The decision failed to discharge partnership duties consistently with good faith and fair dealing.
Ibrahim Iqbal, a limited partner in a cargo-line limited partnership, steered a lucrative client opportunity to his separate company while using partnership resources. The conduct violated the obligation to exercise rights consistently with good faith and fair dealing toward the partnership and other partners.
No. Partnership statutes prohibit elimination of the contractual obligation of good faith and fair dealing, though partners may prescribe reasonable, non-manifestly-unreasonable standards for measuring performance of that obligation.
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Yes. The duty requires honest conduct in both performing contractual obligations and enforcing contractual rights so that neither party deprives the other of the fruits of the bargain.
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The provision is unenforceable to the extent it eliminates meaningful application of the duty. The statute permits only non-manifestly-unreasonable standards for measuring good faith, not conclusive safe harbors that strip the duty of substance.
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A threat that breaches the duty of good faith and fair dealing under an existing contract is an improper means that can render a resulting modification unenforceable.
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No. Acceptance of one improper delivery does not prejudice the right to demand adequate assurance or to insist on good-faith performance of remaining obligations.
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…consider Sloan's interest in having the suit against him compromised by a settlement within the policy limits. [1] There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement. ( Brown v. Superior Court , 34 Cal.2d 559, 564 [212…