Elements for breach of contract:

1. the existence of the contract,
2. plaintiff's performance or excuse for nonperformance,
3. defendant's breach, and
4. the resulting damages to the plaintiff.

(Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Elements for breach of the implied covenant of good faith and fair dealing:

1. existence of a contract between plaintiff and defendant;
2. plaintiff performed his contractual obligations or was excused from performing them;
3. the conditions requiring defendant’s performance had occurred;
4. the defendant unfairly interfered with the plaintiff’s right to receive the benefits of the contract; and
5. the plaintiff was harmed by the defendant’s conduct.

(Merced Irr. Dist. V. County of Mariposa (E.D. Cal. 2013) 941 F.Supp.2d 1237, 1280 discussing California law.) “‘[T]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.’” (Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182, 206 citing Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094.)

Purpose of the Covenant

“‘The [implied] covenant of good faith and fair dealing … [is] implied by law in every contract....’” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1369.) The covenant is read into contracts and functions “‘as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.’” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031–1032.)

Requirements of the Covenant

The covenant also requires each party to do everything the contract presupposes the party will do to accomplish the agreement’s purposes. (Harm v. Frasher (1960) 181 Cal.App.2d 405, 417.) A breach of the implied covenant of good faith is a breach of the contract (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1393), and “breach of a specific provision of the contract is not... necessary” to a claim for breach of the implied covenant of good faith and fair dealing. (Carma Developers, Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 373 & fn. 12.)

“[B]reach of a specific provision of the contract is not... necessary” to a claim for breach of the implied covenant of good faith and fair dealing. (Carma Developers, supra, 2 Cal.4th at 373 & fn. 12.)

“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” (Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 508.) “‘The implied promise [of good faith and fair dealing] requires each contracting party to refrain from doing anything to injure the right of the other to receive the benefits of the agreement.” (Avidity Partners, LLC v. State of California (2013) 221 Cal.App.4th 1180, 1204.) “In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party's rights to the benefits of the contract.”

“The implied covenant of good faith and fair dealing does not impose substantive terms and conditions beyond those to which the parties actually agreed.”(Id.) “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.” (Id.) “The covenant thus cannot ‘be endowed with an existence independent of its contractual underpinnings.’” (Id.) “It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” (Id.)