What is an implied covenant of good faith?

An implied covenant of good faith is a concept in contract law that means parties to a contract should act in good faith and refrain from doing anything that could be seen as taking unfair advantage of the other party. In Hawaii, contract law requires parties to an agreement to cooperate with each other to perform their obligations. Under an implied covenant of good faith, a party must not do anything to prevent or impede the performance of the other party’s obligations. For example, a landlord in Hawaii must not attempt to prevent a tenant from using their rental property in accordance with the terms of the lease. Conversely, a tenant must not use the rental property in a way that was not expressly allowed in the terms of the lease agreement. In this case, the implied covenant of good faith dictates that the landlord and tenant should both act in a way that does not harm the other party’s interests. In another example, an employer in Hawaii must not terminate an employee without providing a good reason or without following the contractual termination procedure. The implied covenant of good faith requires an employer to terminate an employee fairly and not take advantage of the employee’s position. The implied covenant of good faith is an integral part of contract law in Hawaii. It ensures that parties to a contract act fairly and in the best interests of the other party.

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