This post discusses and explains the covenant of good faith and fair dealing.
For decades, courts have held that this covenant is implied in every California contract.
Purpose of Good Faith and Fair Dealing
In 1942, the California Supreme Court stated that “in every contract there exists an implied covenant of good faith and fair dealing.” The intent of this covenant is that “neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract“. (Universal Sales Corporation v. California Press Manufacturing – emphasis added.) (more…)