Clause guide
Good Faith Clause clause: meaning, risks, and what to negotiate
Requires parties to act honestly and fairly when performing contractual obligations.
What it means
Good faith clauses reinforce expectations of fairness and cooperation between contracting parties.
Common risks
- • The meaning of good faith can be interpreted differently.
- • The clause may be vague.
- • It may create unexpected obligations.
What to check before signing
- • Does the clause define good faith obligations?
- • Is the language overly broad?
- • Does it apply equally to both parties?
Negotiation ideas
- • Clarify expectations of cooperation and communication.
- • Avoid vague obligations that create uncertainty.
- • Ensure obligations are mutual.
Example clause
“Each party agrees to perform its obligations under this Agreement in good faith.”
Frequently asked questions
What does acting in good faith mean?
It generally means acting honestly and not undermining the purpose of the contract.
Want help reviewing the full contract?
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