What is an implied covenant of good faith?

An implied covenant of good faith is a rule found in California contract law that requires each party to a contract to act in good faith towards the other. This means that each party must fulfill their obligations under the contract without trying to take advantage of the other party. An implied covenant of good faith also requires that each party in the contract exercise their contractual rights and obligations in an honest and fair manner. In California, courts generally interpret contracts to include an implied covenant of good faith, even if the contract does not explicitly state it. This means that if a party attempts to take advantage of their contractual rights or obligations in an unfair manner, the other party may be able to take legal action in order to remedy the situation. For example, if a party to a contract does not fulfill their obligations in a timely manner, the other party may be able to pursue a breach of contract action in order to recover any losses they may have suffered. As such, it is important for both parties in a contract to act in good faith towards each other in order to ensure that their contractual rights and obligations are fulfilled.

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What is an implied covenant of good faith?

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