LawMeaning

Fair Dealing

Also known as: Commercial Reasonableness

In one sentence

The requirement to act reasonably and honestly in commercial dealings and contract performance.

Plain English

Fair dealing is the principle that parties in a contract must treat each other reasonably and not abuse their power. It goes hand-in-hand with good faith. For example, if a contract gives you the right to cancel, you cannot cancel in a way that is unreasonably harsh or designed purely to harm the other party. Courts imply fair dealing into most contracts, especially in business contexts.

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Example

A supplier has the contractual right to terminate a long-term agreement with 30 days' notice. However, terminating right before the buyer's biggest sales season, purely to cause harm, may violate the duty of fair dealing.

Used in a sentence

“The court found that the company's pricing practices violated the implied covenant of fair dealing.”

Related terms

Implied Covenant of Good Faith and Fair Dealing
An unwritten promise in every contract that parties will act honestly and fairly toward each other.
Good Faith
An obligation to act honestly and fairly in performing or enforcing a contract.
Material Breach
A significant failure to perform a contract obligation that defeats its core purpose.
Entire Agreement
A clause stating that the written contract contains the complete and final agreement between the parties.
Offer
A proposal to enter into a binding agreement on specific terms.
Acceptance
Agreeing to the exact terms of an offer, creating a binding contract.
Consideration
Something of value exchanged by each party to make a contract binding.
Offeror
The person who makes an offer to enter into a contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.