The Implied Covenant of Good Faith and Fair Dealing Under U.S. Law

It is a truth universally acknowledged that even the most well-written agreement never covers all potential issues that may arise in the future, and that when the rubber hits the road, the parties to the agreement never interpret its terms the same way. Agreement terms that seemed clear and sufficient to the parties at a time when they were both excited about entering into business with each other look significantly different after some major change or shift in circumstances. When circumstances change, the parties often find that the agreement does not cover the exact situation they are now facing. Instead, depending on how their contract is interpreted, one of the parties may be able to take advantage of the contractual silence or ambiguity and act in a way that causes detriment to the other.