The following excerpt is from Fosson v. Palace (Waterland), Ltd., 78 F.3d 1448 (9th Cir. 1996):
First, "[i]n every contract there is an implied covenant of good faith and fair dealing that neither party will do anything which injures the right of the other to receive the benefits of the agreement." Bleecher v. Conte, 29 Cal.3d 345, 213 Cal.Rptr. 852, 698 P.2d 1154, 1156 (1981) (citations omitted). "Second, if a contract is capable of two constructions, the court must choose that interpretation which will make the contract legally binding if it can be so construed without violating the intention of the parties." Id., 213 Cal.Rptr. at 855, 698 P.2d at 1157 (citations omitted).
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