Anthony's Pier Four, Inc. v. HBC Associates, 411 Mass. 451 (1991); G.L. c. 260, § 2
Breach of the implied covenant of good faith and fair dealing in Massachusetts
A claim in Massachusetts trial courts · Last verified August 26, 2026
Massachusetts implies a covenant of good faith and fair dealing in every contract. It is pleaded alongside breach of contract so routinely that many complaints treat the two as interchangeable.
They are not. The covenant does one specific thing: it stops a party from using its discretion under the contract to destroy the other side's right to receive the fruits of the deal. It does not add terms, raise the price, or rescue a party from an agreement that turned out badly.
What the claim is
You have a contract. The other side did not technically break any express term, but used its position under the agreement to take away what you bargained for.
Where the right comes from
Common law. The leading statement is Anthony's Pier Four, Inc. v. HBC Associates, 411 Mass. 451 (1991).
What a plaintiff has to prove
- A contract between the parties — the covenant has no independent life;
- Conduct by the defendant that destroyed or injured the plaintiff's right to receive the fruits of the contract; and
- Damages.
Massachusetts does not require proof of a bad motive in every case, though evidence of one helps. What it requires is conduct that defeats the purpose of the agreement while staying inside its letter.
What the covenant does and does not reach
It reaches discretion. Where a contract gives one party the power to approve, to set a price, to terminate, to decide whether a condition is satisfied, or to determine how to perform, that power must be exercised in good faith rather than to escape the bargain.
It does not create rights the contract never gave. The covenant cannot be used to add an obligation the parties left out, to convert an at-will arrangement into a fixed-term one, or to manufacture a duty the agreement expressly disclaimed.
It does not override express terms. A party doing exactly what the contract permits is not in breach of the covenant merely because the result is harsh. That is where most of these claims fail: the defendant points to the clause it exercised, and the question becomes whether the clause was used for its purpose or as a device.
It is a contract claim, not a tort. There is no independent tort of bad faith in Massachusetts outside the insurance setting, where the route runs through chapter 176D and 93A rather than through this covenant.
How long you have to file
Six years under G.L. c. 260, § 2, running from the conduct that breached the covenant.
What has to happen before you file
Nothing, beyond whatever the contract itself requires — notice, cure periods, mediation or arbitration clauses all apply here as they do to the underlying contract claim.
What the claim pays
Contract damages. The measure is the same as for breach of contract: the value of the benefit the conduct took away.
Twelve percent interest under G.L. c. 231, § 6C.
No punitive damages, and no emotional distress damages. The claim sounds in contract.
No attorney's fees, absent a contractual or statutory provision.
The 93A overlay is where the money changes. Conduct that breaches the covenant in a commercial setting can also be an unfair or deceptive act, and chapter 93A § 11 brings double or treble damages and mandatory fees. A bare covenant claim brings none of that, which is why the two are so often pleaded together.
Who can be sued
The other party to the contract. Not its officers, not its parent, and not a third party who benefited — none of them owes the covenant, because none of them is party to the agreement.
The employment context
Massachusetts law is at-will, and the covenant is the narrow exception that has survived.
An employer may terminate an at-will employee for almost any reason or none. What it may not do is terminate to deprive the employee of compensation already earned — the classic case being firing a salesperson immediately before a large commission vests, so the employer keeps the benefit of work already done.
The remedy in those cases is the earned compensation, not damages for the loss of the job. Where what was withheld is wages, the stronger claim is the Wage Act, which pays mandatory treble damages and fees where this covenant pays neither.
Common defenses
- No enforceable contract, which ends the claim.
- The conduct was expressly permitted by the agreement.
- The claim duplicates the breach of contract count and adds nothing.
- No damages distinct from the contract claim.
- The covenant cannot supply the term the plaintiff wants.
- Limitations — six years.
What people get wrong
It protects the deal you made, not a better one. The covenant secures the benefits the contract confers. It does not improve the bargain.
A hard result is not bad faith. A party enforcing a clause it negotiated is doing what the contract allows.
It is not a route to punitive damages. Contract remedies only. The multiplier lives in 93A.
It cannot rescue an at-will employee from termination — only from being cut out of compensation already earned.
Pleading it does not double the recovery. Where the covenant claim rests on the same conduct as the contract claim, it produces the same damages once.
Where it came from
The implied covenant arrived in American contract law as a check on the formalism of a system that enforced the words of an agreement and asked nothing about how the power inside it was used. A contract full of discretionary provisions can be honoured to the letter and emptied of value, and courts needed a principle for that case.
Massachusetts adopted the covenant and then spent decades keeping it small. Anthony's Pier Four stated it in a commercial dispute and framed it around the fruits of the bargain rather than around fairness generally. The employment cases drew the line in the same place — an at-will employee can be fired for a bad reason, but not so the employer can pocket a commission the employee already earned.
The result is a doctrine that is universally implied and rarely dispositive. Its practical importance in Massachusetts is less as a claim of its own than as the bridge to chapter 93A, where the same facts, in a business setting, carry a multiplier and a mandatory fee award.
Common questions
How long do I have to sue for breach of the implied covenant in Massachusetts?
Six years, the same as the underlying contract claim.
Is this different from breach of contract?
Yes. Breach of contract is about violating a term. The covenant is about using the discretion the contract gives you to defeat the other side's benefit from it.
Can I recover punitive damages?
No. The claim sounds in contract. A 93A claim on the same facts can carry a multiplier.
Can I recover attorney's fees?
Not on this claim alone.
Can my employer fire me and keep my commission?
Terminating an at-will employee to avoid paying compensation already earned is the classic covenant breach — and if the money is wages, the Wage Act is the stronger claim.
Does every contract have this covenant?
Yes. Massachusetts implies it in every contract, and the parties cannot write it out entirely.