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

A breach of the implied covenant of good faith is when a party to a contract fails to act fairly, honestly, and reasonably while carrying out the terms of the agreement. It is a general legal principle used in Washington state contract law and it applies to every contract, regardless of whether it was written or verbal. The implied covenant of good faith means both parties to a contract must act with good faith and fairly perform their contractual duties. This means they must keep open communication and adhere to any promises they made. A breach of the implied covenant of good faith can occur if one party fails to inform the other of a material change in circumstances surrounding the contract, fails to act in a timely fashion, or does something else that would be considered prejudicial and unfair to the other party. In Washington, a breach of the implied covenant of good faith is not a crime. However, it is still a serious violation and can result in a variety of damages, such as compensatory damages, consequential damages and punitive damages. When a breach of the implied covenant of good faith occurs, either party may sue for damages, so it is important to be aware of this law and abide by it when entering into any contract.

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