California Civil Jury Instructions (CACI) (2017)

2423. Breach of the Implied Covenant of Good Faith and Fair Dealing - Essential Factual Elements

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2423.Breach of the Implied Covenant of Good Faith and Fair
Dealing—Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] violated the duty to
act fairly and in good faith. To establish this claim, [name of plaintiff]
must prove all of the following:
1. That [name of plaintiff] and [name of defendant] entered into an
employment relationship;
2. That [name of plaintiff] substantially performed [his/her] job
duties [unless [name of plaintiff]’s performance was excused [or
3. That [name of defendant] [specify conduct that plaintiff claims
prevented him/her from receiving the benefits that he/she was
entitled to have received under the contract];
4. That [name of defendant]’s conduct was a failure to act fairly and
in good faith; and
5. That [name of plaintiff] was harmed by [name of defendant]’s
Both parties to an employment relationship have a duty not to do
anything that prevents the other party from receiving the benefits of
their agreement. Good faith means honesty of purpose without any
intention to mislead or to take unfair advantage of another. Generally
speaking, it means being faithful to one’s duty or obligation.
New September 2003
Directions for Use
If the existence of a contract is at issue, see instructions on contract formation in
the 300 series.
This instruction must be completed by inserting an explanation of the conduct that
violated the duty to act in good faith.
The element of substantial performance should not be confused with the “good
cause” defense: “The action is primarily for breach of contract. It was therefore
incumbent upon plaintiff to prove that he was able and offered to fulfill all
obligations imposed upon him by the contract. Plaintiff failed to meet this
requirement; by voluntarily withdrawing from the contract he excused further
performance by defendant.” (Kane v. Sklar (1954) 122 Cal.App.2d 480, 482 [265
P.2d 29], internal citation omitted.) Element 2 may be deleted if substantial
performance is not an issue.
Do not give this instruction if the alleged breach is only the termination of an at-
will contract. (See Eisenberg v. Alameda Newspapers (1999) 74 Cal.App.4th 1359,
1391 [88 Cal.Rptr.2d 802].)
Sources and Authority
• Contractual Conditions Precedent. Civil Code section 1439.
“We therefore conclude that the employment relationship is not sufficiently
similar to that of insurer and insured to warrant judicial extension of the
proposed additional tort remedies in view of the countervailing concerns about
economic policy and stability, the traditional separation of tort and contract law,
and finally, the numerous protections against improper terminations already
afforded employees.” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654,
693 [254 Cal.Rptr. 211, 765 P.2d 373].)
• “The covenant of good faith and fair dealing, implied by law in every contract,
exists merely to prevent one contracting party from unfairly frustrating the other
party’s right to receive the benefits of the agreement actually made. The
covenant thus cannot “ ‘be endowed with an existence independent of its
contractual underpinnings.’ ” It cannot impose substantive duties or limits on
the contracting parties beyond those incorporated in the specific terms of their
agreement.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349–350 [100
Cal.Rptr.2d 352, 8 P.3d 1089], internal citations omitted.)
• “A breach of the contract may also constitute a breach of the implied covenant
of good faith and fair dealing. But insofar as the employer’s acts are directly
actionable as a breach of an implied-in-fact contract term, a claim that merely
realleges that breach as a violation of the covenant is superfluous. This is
because, as we explained at length in Foley, the remedy for breach of an
employment agreement, including the covenant of good faith and fair dealing
implied by law therein, is solely contractual. In the employment context, an
implied covenant theory affords no separate measure of recovery, such as tort
damages.” (Guz, supra, 24 Cal.4th at p. 352, internal citation omitted.)
• “Where there is no underlying contract there can be no duty of good faith
arising from the implied covenant.” (Horn v. Cushman & Wakefield Western,
Inc. (1999) 72 Cal.App.4th 798, 819 [85 Cal.Rptr.2d 459].)
• “We do not suggest the covenant of good faith and fair dealing has no function
whatever in the interpretation and enforcement of employment contracts. As
indicated above, the covenant prevents a party from acting in bad faith to
frustrate the contract’s actual benefits. Thus, for example, the covenant might be
violated if termination of an at-will employee was a mere pretext to cheat the
worker out of another contract benefit to which the employee was clearly
entitled, such as compensation already earned.” (Guz, supra, 24 Cal.4th at p.
353, fn. 18.)
• “The reason for an employee’s dismissal and whether that reason constitutes
bad faith are evidentiary questions most properly resolved by the trier of fact.”
(Luck v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 26 [267
Cal.Rptr. 618], internal citations omitted.)
Secondary Sources
Chin et al., California Practice Guide: Employment Litigation ¶¶ 4:330, 4:331,
4:340, 4:343, 4:346 (The Rutter Group)
1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Contract
Actions, §§ 8.27–8.28
4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination
and Discipline, §§ 60.02[2][c], 60.06 (Matthew Bender)
21 California Forms of Pleading and Practice, Ch. 249, Employment Law:
Termination and Discipline, § 249.14 (Matthew Bender)
California Civil Practice: Employment Litigation §§ 6:21–6:22 (Thomson Reuters)