What does "good faith" in legal contracts imply for the parties involved?

"Good faith" in legal contracts implies an obligation to act honestly and fairly, which is foundational to the expectations of parties entering into agreements. This principle helps to ensure that all parties are dealing with each other in a manner that is respectful of the terms and spirit of the contract. Good faith requires not only the absence of deceit but also suggests an expectation of cooperation and an intent to fulfill contractual obligations without undermining the other party's interests.

In many legal frameworks, courts may interpret a lack of good faith as a breach of contract, leading to potential remedies. This creates a mutual understanding that parties should act in a way that supports fairness and compliance with the agreed-upon terms, rather than pursuing self-serving interests at the expense of others.