CIVIL LITIGATION I FRAUD LITIGATION I BREACH OF CONTRACT – Breach of the Implied Covenant of Good Faith and Fair Dealing
September 25, 2020
In addition to alleging a breach of contract claim, a plaintiff may also include a separate cause of action for breach of the implied covenant of good faith and fair dealing which is implied in every contract. Each and every contract imposes upon all the parties a duty of good faith and fair dealing in its performance and its enforcement. This implied covenant is particularly applicable in investment contracts. An investment contract is one where a party is entrusted with property and resources of another and the party with discretionary power affecting the rights of another must exercise good faith. (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 371–372 [6 Cal.Rptr.2d 467,826 P.2d 710]).
The Judicial Council of California Civil Jury Instructions, which encapsulates this cause of action in CACI No. 325: Breach of Covenant of Good Faith and Fair Dealing – Essential Factual Elements:
“325. Breach of Implied Covenant of Good Faith and Fair Dealing—Essential Factual Elements:
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. [Plaintiff] claims that [Defendant] violated the duty to act fairly and in good faith. To establish this claim, [Plaintiff] must prove all of the following:
A claim for the breach of the implied covenant of good faith and fair dealing requires the plaintiff to prove that: (1) two parties entered into a contract under which the plaintiff reasonably expected to benefit; (2) the benefit was denied or obstructed by the other party’s actions; and (3) the other party’s actions were taken in bad faith. Often times not only is this cause of action alleged with a cause of action for breach of contract; however if a party obstructed or denied another from receiving the benefits of the contract or otherwise acted in bad faith then this could raise a civil cause of action for fraud.
Below are articles discussing breach of contract claims and cases involving breach of investor agreements:
Below are articles discussing civil causes of action for fraud:
To better understand what types of damages in fraud and breach of contract cases, please see the links below:
Below are articles discussing fiduciary duties which are duties owed to investors:
Our other articles discussing fraud in California and fraud in general, are linked below:
If you have questions regarding a potential breach of contract claim or fraud matter, we invite you to contact Adjadj Legal Group at 619-432-5145 for a free consultation with one of our experienced Fraud attorneys and business litigation Lawyers.