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Implied covenant of good faith and fair dealing

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Definition Edit

“The implied covenant of good faith and fair dealing between parties to a contract provides that ‘neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.’ It is implicit in that definition, and made explicit in our precedent, that the prohibition contained in the covenant applies only to conduct during performance of the contract, not to conduct occurring prior to the contract’s existence, such as conduct affecting contract negotiations. Equally clear from this definition is that the requirement of good-faith performance ultimately is circumscribed by the obligations — the contractual ‘fruits’ — actually contained in the agreement.”[1]

References Edit

  1. Accusoft Corp. v. Palo, 237 F.3d 31, 45, 57 U.S.P.Q.2d (BNA) 1569 (1st Cir. 2001) (full-text) (citations omitted).

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