Breach of the Implied Covenant of Good Faith and Fair Dealing
Los Angeles Breach of Implied Covenants Attorney
In California, every contract contains an implied covenant of good faith and fair dealing. This legal principle ensures that parties to a contract act honestly and fairly toward each other and do not intentionally undermine the agreement’s benefits. When one party interferes with the other party’s ability to receive the expected benefits of the contract, it may constitute a breach of the implied covenant of good faith and fair dealing under California law.
Understanding how this doctrine works is essential for businesses and individuals who rely on contractual agreements.
Case Results
$3.4M Recovered
Business Litigation
Assisted in recovery ofthe balance of the purchase price for the sale of a business
$2.7M Verdict
Business Litigation
Assisted in obtaining jury verdict for breach of contract and conversion of business ownership, jury verdict only $25k less than requested
$342k Judgement
Business Litigation
For fraudulent inducement of loans, breach of contract, and defamation in false online posts and reviews
$317k Judgement
Business Litigation
For two brothers and their international business after proving fraud, breach of contract, and defamation by a serial fraudster, despite delays, false accusations, and a last-minute bankruptcy filing
Judgement
Business Litigation
For an elderly landlord and trust, defeating all claims by evicted tenants who tried to misuse COVID as an excuse for nonpayment
$385k Judgement
Business Litigation
For a textile manufacturer in a contract dispute, despite a cross-complaint from the wholesaler
$657k Judgement
Business Litigation
Against a real estate agent who misappropriated client funds, using forensic accounting to prove full fraud and conversion.
$398k Judgement
Business Litigation
By enforcing a promissory note, recovering 100% of damages plus interest
$125k Judgement
Business Litigation
Helped obtain a default judgment against an attorney for unpaid loan balance and battery, after securing terminating sanctions for discovery violations
Disclaimer: Illustrative examples of case types and outcomes. Attorneys cannot guarantee outcomes. Results are case-specific and depend on the true facts of the case. More information here.
What Is the Implied Covenant of Good Faith and Fair Dealing in California
The implied covenant of good faith and fair dealing is a fundamental doctrine in California contract law. Even if a contract does not explicitly mention it, the law automatically assumes that both parties will perform their obligations honestly and in a manner that does not deprive the other party of the benefits of the agreement.
In other words, neither party can take actions that technically comply with the written terms of the contract but effectively defeat its purpose.
How to Prove Breach of Implied Covenant of Good Faith and Fair Dealing
To prevail on a claim for breach of implied covenants, the plaintiff must prove:
1. The existence of a contract;
2. That the plaintiff performed the contract;
3. Some bad faith conduct of the defendant; and
4. Resulting harm.
Examples of Bad Faith and Breach of Implied Covenants in California
This type of claim may occur in many different scenarios, such as:
- In commercial or business contracts where a party or co-owner exercises a clause or provision for that person’s personal benefit, such as unilaterally amending the agreement
- In real estate transactions where a party intentionally obstructs closing conditions or withholds approvals without justification
- In the employment context where an employee is terminated because the employer is trying to avoid paying bonuses, commissions, or other vested benefits under an employment contract
Damages for Breach of the Implied Covenant in California
If a court finds a breach of the implied covenant of good faith and fair dealing, the injured party may recover several types of contractual damages, including:
- Compensatory damages for financial losses caused by the breach
- Consequential damages resulting from the bad faith conduct
- Attorney’s fees and litigation costs in certain cases
In addition, punitive damages may be available where the intentional misconduct was fraudulent, oppressive, or malicious.
Why Legal Guidance Matters
Claims involving bad faith breach of contract in California can be complex. These cases often require careful analysis of contract language, business practices, and the parties’ intent. An experienced Los Angeles breach of implied covenants attorney can evaluate whether conduct rises to the level of bad faith and help pursue compensation for damages caused by the breach.
Business Litigation
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His strategic approach and ability to think several steps ahead gave us a tremendous sense of confidence and security throughout the entire process, especially the trial.
During the trial, he was fully prepared every single day, explaining his thought process to us about why he was asking or not asking certain questions to all the witnesses, raising timely objections with majority of them being sustained by the Judge…At the end of the day he wanted to make sure that we put all of our ammo on the table and we were able to successfully do that.
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S. A. (Business, Fraud)
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E. A. (Business)
Los Angeles Breach of Implied Covenants Attorney FAQs
What’s the difference between breach of contract and breach of the implied covenant?
A party may not technically breach the terms of the agreement but act in a way that frustrates the other party’s ability to receive the benefit of the contract. This typically arises in cases where a party has discretionary power under the contract that is not exercised in good faith.
How is the implied covenant different than the terms of the contract?
Many contracts do not expressly include the language that the parties must act in good faith. The implied covenants do not impose any additional obligations or duties upon the parties than the contract’s terms, meaning the parties are not required to perform any “additional” terms to not breach the implied covenants. Instead, the implied covenants stand for the idea is that when parties agreed to do something, they do so in good faith.
What is the statute of limitation for breach of implied covenant of good faith and fair dealing in California?
Because the claim is based on a contract the statute of limitations is four years for a written contract, and two years for an oral or implied contract.