good faith

Good faith is a broad term that’s used to encompass honest dealing. Depending on the exact setting, good faith may require an honest belief or purpose, faithful performance of duties , observance of fair dealing standards, or an absence of fraudulent intent .

A fiduciary relationship creates a duty of good faith between the agent and the principal . The breach of this duty of good faith can lead to liability . Failure to act in good faith is known as bad faith and is generally considered to be a level of culpability greater than negligence .

[Last reviewed in January of 2023 by the Wex Definitions Team ]

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