'Sole Discretion’ Provisions and the Implied Covenant of Good Faith and Fair Dealing

The so-called “implied covenant of good faith and fair dealing” has produced a significant amount of confusion among courts and litigants, particularly in the context of agreements providing one party with sole discretion to act (or not act) in a particular manner. Two recent New York state appellate court decisions have helped to clarify the scope of the implied covenant in the face of a “sole discretion” provision.