What is the Implied Covenant of Good Faith and Fair Dealing?

Under Florida law, there is an implied promise of good faith and fair dealing that may exist in any given contract.  Sepe v. City of Safety Harbor, 761 So.2d 1182, 1184 (Fla. 2d DCA 2000).  This means that neither party will do anything to unfairly interfere with the right of any other party to the contract to receive the contract's benefits.  The purpose of the implied covenant is "to protect the reasonable expectations of the contracting parties."   Cox v. CSX Intermodal, Inc., 732 So.2d 1092, 1097 (Fla. 1st DCA 1999).  

However, the implied promise of good faith and fair dealing cannot create obligations that are inconsistent with the contract's terms. Speedway SuperAmerica, LLC v. Tropic Enterprises, Inc., 966 So.2d 1, 3 n.2 (Fla. 1st DCA 2007)(The implied covenant of good faith "is a gap filling default rule" which comes into play "when a question is not resolved by the terms of the contract or when one party has the power to make a discretionary decision without defined standards.")  The implied covenant attaches to the performance of a specific or express contractual provision. Snow v. Ruden, McClosky, Smith, Schuster & Russell, P.A., 896 So.2d 787, 792 (Fla. 2d DCA 2005).

The trial court must determine whether the implied covenant of good faith and fair dealing applies to a given contract.  If the trial court determines that the implied covenant applies, then the plaintiff must prove that the defendant violated the duty to act in good faith and fairly under a specific part of the contract. To establish this claim, the plaintiff must prove all of the following:

  1. The plaintiff and defendant entered into a contract;
  2. The plaintiff did all, or substantially all, of the significant things that the contract required the plaintiff to do (or the plaintiff was excused from having to do those things);
  3. All conditions required for the defendant's performance had occurred;
  4. The defendant's actions or omissions unfairly interfered with the plaintiff's receipt of the contract's benefits;
  5. The defendant's conduct did not comport with the plaintiff's reasonable contractual expectations under a specific part of the contract; and
  6. The plaintiff was harmed by the defendant's conduct.

Joel Ewusiak frequently represents parties in contractual disputes.  Please contact Joel for legal assistance with your particular matter.