The term “good faith” refers to a state of mind which consists of honesty in belief of purpose and absence of any intent to defraud or to take unfair advantage of someone or something.
“The phrase ‘good faith’ is used in a variety of contexts and its meaning varies somewhat with the context. Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving ‘bad faith’ because they violate community standards of decency, fairness or reasonableness. The appropriate remedy for a breach of the duty of good faith also varies with the circumstances.”
Source: Restatement (Second) of Contracts § 205 cmt. a (1981).