Implied Covenant

The implied covenant refers to an unspoken agreement or understanding that exists within a contract, even if it's not explicitly mentioned. In legal and business contexts, it means that both parties are expected to act in good faith and uphold the spirit of the agreement. For example, if one party fails to uphold their side of the deal or obstructs the other party's ability to fulfill their obligations, they may be violating the implied covenant. This concept helps ensure fairness and cooperation in relationships, promoting trust and accountability despite the absence of specific terms.