Boeing Co. v. Kipp, 809 F.3d 432 (9th Cir. 2023)
Boeing Co. v.
Does the implied covenant of good faith and fair dealing allow for flexibility in performance benchmarks when external market conditions dramatically change?
The implied covenant of good faith and fair dealing mandates that neither party do anything which will injure the right of the other to receive the benefits of the agreement, and must be applied in consideration of the contract's context and industry practices.
The court held that the implied covenant of good faith and fair dealing required an adjustment of obligations, as Boeing's insistence on strict compliance was unreasonable given the unforeseen market changes impacting performance.
Boeing Co. v. Kipp is significant for law students as it provides a crucial illustration of the judiciary's approach to the covenant of good faith and fair dealing. It illustrates how courts may balance the need for adhering to contract terms with the necessity for flexibility, providing real-world context for contract law principles. The case is particularly relevant for understanding how courts assess industry context and commercial realities when interpreting and enforcing contracts.