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An options contract is an agreement between two parties to facilitate a potential transaction on an underlying security at a preset price, referred to as the strike price, prior to or on the expiration date.
While the letter of intent is not a ?binding? document, it is still a contract with potentially binding provisions. The parties may agree to include binding conditions in the LOI, such as limitations on the sharing or using information obtained during the negotiations for unrelated purposes.
This means that, even though not specifically stated in the contract, it is implied or understood that each party to the contract must act in good faith and deal fairly with the other party in performing or enforcing the terms of the contract.
For example, if a famous athlete signs an agreement only allowing one company to use their image on products in exchange for a part of the profits, a court would likely find that the company must attempt to make and sell those products even if the contract did not explicitly say as much.
In general, every contract contains an implied duty of good faith and fair dealing. This duty requires that neither party will do anything that will destroy or injure the right of the other party to receive the benefits of the contract.
While this may sound like a technicality, in fact, it is one of the most critical elements to the contract's enforcement. A ?Choice of Law? clause in a contract mandates that the agreement will be interpreted and enforced under the law of a state (i.e., NJ, Fla, Alaska) selected and recited in the contract.
When looking for an example of good faith exception, you could look no further than your own business dealings. As long as you are acting with honesty and integrity with those you have contracts with, and they are keeping their promises in return, you are acting in good faith.
An implied-in-fact contract is based on inferences from the facts and circumstances of the case, including: The parties': ? conduct; ? communications; and ? course of dealing.