Legal Dictionary of Pakistan

duty of good faith and fair dealing

A duty that is implied in some contractual relationships, requiring the parties to deal with each other fairly, so that neither prohibits the other from realizing the agreement's benefits. This duty is most commonly implied in insurance contracts, and usu. against the insurer, regarding matters such as the insurer's obligation to settle reasonable demands that are within the policy's coverage limits. See GOOD FAITH; BAD FAITH.