What is an implied covenant of good faith?

An implied covenant of good faith is a fundamental part of contract law in North Carolina. This covenant is defined as a promise, implied by law, which each party to the contract agrees to in good faith. The covenant establishes an obligation between two parties and it is based on fairness, trust, and honesty. Essentially, an implied covenant of good faith is a concept that is not explicitly written into the contract, but it is implied that the parties agree to it. This concept was established to ensure that each party involved in the contract does not take advantage of the other party or act unjustly. This concept also forces the parties to be sincere, honest, and equitable with their dealings. One example of the implied covenant of good faith would be if one party to a contract, say an employer, refused to make payments to the other party, such as an employee, despite having the means to do so. This would be a violation of the implied covenant, as it violates the concept of fairness and equity between the two parties. Ultimately, the implied covenant of good faith is a fundamental part of contract law in North Carolina. It helps to preserve fairness and equity between the two parties, and ensures that both parties abide by the terms of the contract. This is an important part of making sure that the rights of all parties are respected and upheld.

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