Market Street Associates v. Frey case brief

Market Street Associates v. Frey; (7^th Cir., 1991); CB 445; Notes 46

• Facts: P and D had a lease agreement. One of the provisions said that the lessee should request the lessor to finance the costs and expenses of additional improvements provided the amount was at least $250,000. The lessor agrees to give reasonable consideration to providing the financing and they shall negotiate in good faith concerning the construction. Paragraph 34 goes on to say that if the negotiations fail, the lessee shall be entitled to repurchase the property at the price it sold it at, plus 6 percent a year for each year since original purchase. Couple of requests, no mention of paragraph 34, funding turned down, P claims they can buy the property at the below market value price set forth in paragraph 34
• Holding: if P did try to trick D, this would be the type of opportunistic behavior in an ongoing contractual relationship that would violate the duty of good faith performance, however that duty is formulated
• Commentary: Posner is basically saying that the trickery that is allowable while negotiating a contract is not allowable once two parties are in the contractual agreement.