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4.2-11  Implied Covenant of Good Faith and Fair Dealing

Revised to January 1, 2008

Every contract contains an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other party to receive the benefits of the contract.  The concept is essentially a rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended.  It is not a separate contractual claim and the covenant cannot be applied to achieve a result contrary to the clearly expressed terms of the contract between the parties.

Here, the (defendant / plaintiff) had an obligation to exercise good faith when (performing / enforcing) the following contract term:  <describe the contract term in issue>.

You must decide whether the (defendant / plaintiff) fulfilled that obligation to exercise good faith.

Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party.  Good faith and fair dealing mean an attitude or state of mind denoting honesty of purpose and freedom from intention to defraud.  It means being faithful to one's duty and obligation under the contract.

Good faith is defined as the opposite of bad faith.  If the (defendant / plaintiff) engaged in bad faith you must find that (he/she/it) did not fulfill the covenant.  Bad faith generally implies a design to mislead or to deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation not prompted by an honest mistake as to one's rights or duties.  Bad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose.  Bad faith contemplates a state of mind affirmatively operating with furtive design or ill will.

Authority

Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227, 240 (2007); Habetz v. Condon, 224 Conn. 231, 238 (1992); Eis v. Meyer, 213 Conn. 29, 36 (1989); Warner v. Konover, 210 Conn. 150, 154 (1989); Buckman v. People Express, Inc., 205 Conn. 166, 171-72 (1987) (specifically holding that the trial court's instruction was not in error); Foley v. Huntington Co., 42 Conn. App. 712, 727 n.6 (1996) (quoting instruction on the implied covenant of good faith and fair dealing); Feinberg v. Berglewicz, 32 Conn. App. 857, 861 (1993); General Statutes §§ 42a-1-203 (obligation of good faith), 42a- 2-103 (1) (b) (definition of good faith).

Notes

The Connecticut Supreme Court has stated that "[t]he concept of good faith and fair dealing is [e]ssentially . . . a rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended." (Internal quotation marks omitted.)  PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., 267 Conn. 279, 302 (2004); see also Verrastro v. Middlesex Ins. Co., 207 Conn. 179, 190 (1988); Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 567 (1984).

One possible exception to the rule that the implied covenant cannot be applied to achieve a result contrary to express terms is where those express terms are contrary to public policy.  Eis v. Meyer, 213 Conn. 29, 37 (1989).