Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc.

Does the implied covenant of good faith that is present in every contract apply to a party’s exercise of an express and unconditional contract right? In this case, Goodyear Tire & Rubber Co. entered into a dealership contract with Whiteman Tire, Inc., but reserved the right to sell tires in Whiteman’s trade area. We are asked to decide whether the implied covenant of good faith required Goodyear to exercise its right to compete so as not to deprive Whiteman of the benefit of its agreement to act as a Goodyear dealer. We hold the covenant does not apply in the circumstances present here.

Whitema…