BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING

Asked about 1 year ago - 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. Michael Raymond Daymude

    Pro

    Contributor Level 20

    6

    Lawyers agree

    Answered . 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... more
  2. Michael Charles Doland

    Contributor Level 20

    2

    Lawyers agree

    Answered . 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... more
  3. Brad S Kane

    Pro

    Contributor Level 18

    2

    Lawyers agree

    Answered . 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.

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