You establish one or more contracts that define and govern the business relationship you engage in with another party. This is just logical thinking. It should go without saying that you and the new company partner have a verbal contract that goes beyond the terms of any agreements you sign, an expectation for cooperation and mutual gain. This is known as fair dealing, and good faith includes duty. If you need help resolving a business dispute in New Jersey, contact a business litigation attorney.
What do you mean by the implied duty of good faith and fair dealing?
In the business industry, it is often known that there is an implied duty of honesty and fair dealing in every transaction. This is the honest assumption that the people who make up an agreement will handle one another with integrity and equality so that they may both benefit from the arrangement.
This duty states that neither party can choose or behave in a way that would damage the other’s ability to benefit from the agreement. A large number of jurisdictions recognize the implied duty of good faith and fair conduct as:
For a contract to be accomplished, each party reasonably expects the other to act appropriately as well. A contract breaches when one party exploits the discretion provided by the agreement by acting dishonestly or according to customary business standards in order to prevent the other party from the benefit of the agreement.
Implied duty
The implied duty of good faith always governs the two sides of a business relationship, even in situations when a contract may not specifically encourage one to work together or refrain from interfering with the other.
Breaching the Implied Duty
If it looks like a party’s conduct is hindering, destroying, or acting against the other party’s capacity to perform the contract as intended or to profit from it, that party may be considered in breach of the implied duties of good faith and fair dealing.
Good faith
Being honest in one’s actions during an agreement is a sign of good faith. Even in situations when the charter clearly allows either party to end the contract at any point for any reason, the duty to act in good faith remains in place.
When someone makes a contract that they know they can fulfill, that is a simple example of behavior that shows good faith.
Fair Dealing
Fair dealing is more than just being honest. It involves maintaining one’s word and not acting in a way that is adverse to the interests of the other party. Each party shall behave in a transparent and contract-abiding manner all through the agreement.
