Market Street Associates Limited Partnership v. Frey
United States Court of Appeals for the Seventh Circuit
941 F.2d 588 (7th Cir. 1991)
Under a sale-leaseback lease, the trust (defendant) agreed to reasonably consider financing improvements upon lessee request, with a repurchase option if financing negotiations failed; Market Street (plaintiff), holding the lease by assignment, sought $2 million in improvement financing from the trust without ever mentioning the lease's specific financing provision, was told the trust only financed loans over $7 million, and then tried to exercise its repurchase option when the trust refused to sell the property outright. The trust argued Market Street failed to negotiate in good faith by never invoking the specific contractual provision, and the district court granted the trust summary judgment; Market Street appealed.
Whether the duty of good faith prevents a party from taking opportunistic advantage of another party in a way that was not resolved explicitly by the parties at the time of drafting and that undermines the parties' cooperative venture.