Skip to main content

BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING

Van Nuys, CA |

I was reading on breach of covenant of good faith and fair dealing, it states that every contract implies a covenant of good faith, etc. Does this only apply to written contracts? Does my HOA owe me a duty of good faith and fair dealing?

Attorney Answers 3


  1. The covenant of good faith and fair dealing does not apply to all contracts. Normally it applies to sale of goods between merchants under the UCC. There is other limited applicability. The duties that your homeowner association owes you may be fiduciary duties or contractual duties or none at all depending on your detailed facts.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.


  2. My colleague is correct. I just want to add that the covenant of good faith and fair dealing cannot contradict the express terms of the contract.


  3. I must respectfully disagree with my colleagues. From CACI: 325. "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."

    “The implied covenant of good faith and fair dealing rests upon the existence of some specific contractual obligation. ‘The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract’s purpose.’ . . . ‘In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.’ ” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031—1032 [14 Cal.Rptr.2d 335], internal citations omitted.)

    “There is no obligation to deal fairly or in good faith absent an existing contract. If there exists a contractual relationship between the parties . . . the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract.” (Racine & Laramie, Ltd., supra, 11 Cal.App.4th at p. 1032, internal citations omitted.)

    In my opinion, yes – your HOA does owe you duties under the CC&Rs, By-Laws, Rules and Regulations, etc. Those duties may include the obligation to deal with you in good faith. Similarly, you have the same obligation to the HOA.

    I am licensed in California only and my answers on Avvo assume California law. Answers provided by me are for general information only. They are not legal advice or counsel. Answers must not be relied upon. Legal advice and counsel must be based on the interplay between specific exact facts and the law. This forum does not allow for the discussion of that interplay. My answer to any specific question would likely be different if that interplay were explored during an attorney-client relationship. I provide legal advice and counsel during the course of an attorney-client relationship only. The exchange of information through this forum does not establish such a relationship. That relationship is established only by personal and direct consultation with me followed by the execution of a written attorney-client agreement signed by each of us. The communications on this website are not privileged or confidential and I assume no duty to anyone by my participation on Avvo or because I have answered or commented on a question. All legal proceedings involve deadlines and time limiting statutes. So that legal rights are not lost for failure to timely take appropriate action and because I do not provide legal advice or counsel in answer to any question, if you are an interested party you should promptly and personally consult with an attorney for advice and counsel. Also, see Avvo's terms and conditions of use, specifically item 9, incorporated by this reference

Lawsuits and disputes topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics