What is an implied covenant of good faith?

An implied covenant of good faith is a legal concept that exists in Texas contract law. It states that both parties of a contract must act fairly and in good faith. This means that neither party should try to take advantage of the other or act in a way that would deprive the other party of the benefits of their agreement. In other words, both parties must act honestly and reasonably to ensure that all the terms of the contract are fulfilled. An implied covenant of good faith helps to ensure that the expectations and intentions of all parties are fulfilled without disputes. For instance, if one party of the contract breaches its terms, the other party may be able to sue for damages. In addition, if one party tries to take advantage of the other, the court may decide to enforce the implied covenant of good faith and award damages to the other party. The implied covenant of good faith also acts as a safety net for both parties of the contract, as it helps ensure that all commitments of both parties are fulfilled. This can help prevent unfairness or unjust enrichment towards one party. Additionally, it serves to promote stability in contract law by allowing the court to enforce the implied covenant of good faith and award damages if either party violates it.

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What is an implied covenant of good faith?

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