Implied Duty of Good Faith and Fair Dealing

Overview

In every contract or agreement there is an implied promise of good faith and fair dealing. This means that each party will not do anything to unfairly interfere with the right of any other party to receive the benefits of the contract; however, the implied promise of good faith and fair dealing cannot create obligations that are inconsistent with the terms of the contract.

Metcalf Constr. Co. V. United States

The Federal Circuit held that specifically targeted conduct is not required to prove a breach and rejected the government's assertion that violation of an express provision of the contract is a prerequisite to liablity, while observing that the scope of duty depends on the context of the particular contract and its "contemplated value." The court also vacated the judgment for the government on the ground that the contractor was not to bear the risk of error in the government's affirmative representations made in pre-bid documents.

Related Links

http://en.wikipedia.org/wiki/Good_faith_(law)