The Implied Covenant Of Good Faith And Fair Dealing In Florida Contracts

At Perez Mayoral, P.A., we regularly advise clients on contractual disputes. One of the most commonly misunderstood concepts in Florida contract law is the implied covenant of good faith and fair dealing. While Florida courts recognize this covenant in every contract, it is not a free-standing obligation—it must be tied directly to the performance of an express contractual term. If you need help with a contract, other business law matters, or help with issues you have with an association or management company, our Port St. Lucie, FL business litigation lawyer is here to help.

What Is The Implied Covenant?

Under Florida law, every contract includes an implied promise that both parties will act in good faith and deal fairly with one another. The purpose of this covenant is to protect the reasonable expectations of the parties in light of their express agreement. It prevents one party from using contractual discretion in a way that is arbitrary, capricious, or undermines the spirit of the deal.

However, this covenant does not create new duties. A claim for breach of the implied covenant cannot succeed unless there is also a breach of an express term of the contract. Courts have made this clear in cases such as:

• QBE Ins. Corp. v. Chalfonte Condo. Apt. Ass’n, 94 So. 3d 541 (Fla. 2012)
• Diageo Dominicana, S.R.L. v. United Brands, S.A., 314 So. 3d 295 (Fla. 3d DCA 2020)
• Hahamovitch v. Delray Prop. Invs., Inc., 165 So. 3d 676 (Fla. 4th DCA 2015)

When Does The Covenant Come Into Play?

The covenant is most relevant in situations where:

• The contract leaves certain terms undefined.
• The contract grants one party broad discretion.

In these cases, Florida courts apply the covenant as a gap-filling rule, ensuring that discretion is exercised consistent with the other party’s reasonable expectations. For example:

In Publix Super Mkts., Inc. v. Wilder Corp., 876 So. 2d 652 (Fla. 2d DCA 2004), the court emphasized that contractual discretion must be exercised reasonably.

Similarly, Speedway SuperAmerica, LLC v. Tropic Enters., 966 So. 2d 1 (Fla. 2d DCA 2007) and Overseas Inv. Grp. v. Wall St. Electronica, Inc., 181 So. 3d 1288 (Fla. 3d DCA 2016) demonstrate how the covenant limits abuse of contractual discretion.

Defenses To A Claim For Breach

Florida law provides several defenses that often defeat claims for breach of the implied covenant:

1. Derogation Of Express Terms – The covenant cannot be used to override clear contract language.
2. Variance Of Express Terms – Courts reject claims where the implied duty would alter or contradict the written terms.
3. Absence Of Express Breach – No claim exists unless an express contractual obligation was also breached.
4. Full Performance – If a party faithfully performs all express terms, there is no breach.
5. Expired Contracts – Once a contract expires, no implied covenant exists.
6. Disclaimer Or Waiver – While Florida Statutes § 671.102(3) prevents parties from disclaiming good faith outright, they may define performance standards so long as they are not “manifestly unreasonable.”

Statute Of Limitations

A claim for breach of the implied covenant of good faith and fair dealing in Florida must be filed within four years under Fla. Stat. § 95.11(3)(o).

Key Takeaways

• Florida law implies good faith and fair dealing in every contract, but it is not an independent cause of action.
• A successful claim requires a breach of an express contract term.
• The covenant mainly acts as a safeguard against abuse of discretion and to protect reasonable expectations.
• Defenses often focus on the fact that the covenant cannot alter, expand, or contradict the written contract.

How Perez Mayoral, P.A. Can Help

At Perez Mayoral, P.A.., we represent clients across Florida in contract disputes, HOA and condominium matters, and business litigation. Whether you are enforcing your rights or defending against a breach claim, our team understands how Florida courts interpret the implied covenant of good faith and fair dealing. If you are involved in a contract dispute, contact us today to schedule a consultation.