Good faith
Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.
A general assumption of the law of contracts is an implied covenant of good faith and fair dealing . People are expected to act in good faith and deal fairly without breaking their word , using tricky means to avoid obligations, or denying what the other party obviously understood.
A lawsuit (or one of the causes of action in a lawsuit) based on the breach of this covenant is often brought when the other party has been claiming technical excuses for breaching the contract or using the specific words of the contract to refuse to perform when the surrounding circumstances or apparent understanding of the parties were to the contrary.
The implied covenant of good faith and fair dealing has been incorporated into the Uniform Commercial Code which defines good faith as "honesty in fact and the observance of reasonable commercial standards of fair dealing." .
The implied covenant has also been adopted by the American Law Institute as part of the Restatement (Second) of Contracts. §205. sets out a duty of good faith and fair dealing where good faith is defined as "honesty in fact in the conduct or transaction concerned"
The principle of good faith and fair dealing is a fundamental principle of international trade asserted by the Unidroit Principles of international commercial contracts.