4.2-11 Implied Covenant of Good Faith and Fair
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.