Good Faith and Fair Dealing

In one sentence

A legal duty to act honestly and fairly when making and performing contracts.

Plain English

Every contract comes with an automatic promise: both parties will deal with each other honestly and fairly. You can't trick the other side, hide important facts, or act in a sneaky way to get out of your obligations. This duty applies even if the contract doesn't mention it. It means doing what you promised in the spirit the other person reasonably expected.

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Example

A landlord must maintain the rental property in habitable condition and can't deliberately shut off utilities to force a tenant out early. That would violate the duty of good faith. Similarly, a tenant can't destroy the property or refuse to pay rent as a game—both parties must act honestly.

Used in a sentence

“The insurance company's refusal to investigate the claim in good faith and fair dealing exposed it to liability.”

Related terms

Breach of Contract

Failure to do what a contract requires, without a valid legal excuse.

Contract Interpretation

The process of determining what a contract's words and terms actually mean.

Material Breach

A significant failure to perform a contract obligation that defeats its core purpose.

Rescission

Unwinding a contract entirely, returning both parties to their positions before the deal.

Accord and Satisfaction

An agreement to settle a dispute by accepting something different from the original contract.

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.

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.