What is a breach of the implied covenant of good faith?

A breach of the implied covenant of good faith is a violation of a duty that is required even when no specific contract exists. This principle is assumed when parties enter into a contract in Virginia. It dictates that the parties must act fairly and honestly in all matters related to the contract, even if the terms of the contract are silent on the matter. For example, an employer and employee may enter into a contract that does not explicitly state that the employee will be given a fair chance at promotion. However, there is an implied covenant of good faith that dictates that the employer must make sure the employee is given a fair chance regardless. If the employer fails to do this, it could be considered a breach of the implied covenant of good faith. In addition, other agreements besides employment contracts can be subject to the implied covenant of good faith. For example, if a landlord and tenant enter into a written contract, there is an implied covenant of good faith that says the landlord must maintain the property in a habitable state and that the tenant must pay rent in a timely manner. If either party fails to do this, it is considered a breach of the implied covenant of good faith.

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