Market Street Assocs. Ltd. Partnership v. Frey
941 F.2d 588
FACTS
-Plaintiffs, lessor partnership and its general partner, brought an action against defendants, lessor trust and individual trustees, claiming that defendants breached their duty of good faith performance of the parties’ contract.
-The district court granted summary judgment in favor of defendants.
-On appeal, the court reversed and remanded, holding that summary judgment was not proper because the facts could have been interpreted in favor of plaintiffs.
-Under the parties’ contract, plaintiff lessor was entitled to purchase the leased property at a price computed in the contract if its request for financing to make improvements on the property failed. -After defendants refused financing, plaintiffs sought to purchase the property.
-Plaintiff general partner did not alert defendants to the computation paragraph in the contract.
-Viewing the facts favorably to plaintiffs, the court found that whether plaintiffs acted in bad faith in not notifying defendants of the paragraph bore on plaintiff general partner’s state of mind.
PROCEDURAL HISTORY
-Plaintiffs, lessor partnership and its general partner, appealed an order from the United States District Court for the Eastern District of Wisconsin, which granted summary judgment in favor of defendants, lessor trust and individual trustees, in plaintiffs’ contract action for breach of the duty of good faith performance.
RULES
-A party to a contract may not intentionally exploit the other party’s oversight of an important fact
ANALYSIS
-Even after a party has signed a contract, he/she is not obliged to become an altruist toward the other party and relax the terms if he gets into trouble in performing his side of the bargain. Otherwise mere difficulty of performance would excuse a contracting party — which it does not.
-The concept of the duty of good faith like the concept of fiduciary duty is aimed at approximating the terms the parties would have negotiated had they foreseen the circumstances that have given rise to their dispute. The parties want to minimize the costs of performance. The doctrine is designed to do this by reducing defensive expenditures is a reasonable measure to this end, interpolating it into the contract advances the parties’ joint goal.
-The parties to a contract are embarked on a cooperative venture, and a minimum of cooperativeness in the event unforeseen problems arise at the performance stage is required even if not an explicit duty of the contract.
-The the doctrine of good faith's aim is to forbid the kinds of opportunistic behavior that a mutually dependent, cooperative relationship might enable in the absence of rule.
-“Good faith”‘ is a compact reference to an implied undertaking not to take opportunistic advantage in a way that could not have been contemplated at the time of drafting, and which therefore was not resolved explicitly by the parties.
CONCLUSION
-Court reversed summary judgment entered in favor of defendants, lessor trust and individual trustees, and remanded, holding that summary judgment was not proper because when viewing the facts favorably to plaintiffs, lessor partnership and its general partner, whether plaintiffs acted in bad faith in not notifying defendants of a purchase price computation paragraph in the contract bore on plaintiff general partner’s state of mind.
FACTS
-Plaintiffs, lessor partnership and its general partner, brought an action against defendants, lessor trust and individual trustees, claiming that defendants breached their duty of good faith performance of the parties’ contract.
-The district court granted summary judgment in favor of defendants.
-On appeal, the court reversed and remanded, holding that summary judgment was not proper because the facts could have been interpreted in favor of plaintiffs.
-Under the parties’ contract, plaintiff lessor was entitled to purchase the leased property at a price computed in the contract if its request for financing to make improvements on the property failed. -After defendants refused financing, plaintiffs sought to purchase the property.
-Plaintiff general partner did not alert defendants to the computation paragraph in the contract.
-Viewing the facts favorably to plaintiffs, the court found that whether plaintiffs acted in bad faith in not notifying defendants of the paragraph bore on plaintiff general partner’s state of mind.
PROCEDURAL HISTORY
-Plaintiffs, lessor partnership and its general partner, appealed an order from the United States District Court for the Eastern District of Wisconsin, which granted summary judgment in favor of defendants, lessor trust and individual trustees, in plaintiffs’ contract action for breach of the duty of good faith performance.
RULES
-A party to a contract may not intentionally exploit the other party’s oversight of an important fact
ANALYSIS
-Even after a party has signed a contract, he/she is not obliged to become an altruist toward the other party and relax the terms if he gets into trouble in performing his side of the bargain. Otherwise mere difficulty of performance would excuse a contracting party — which it does not.
-The concept of the duty of good faith like the concept of fiduciary duty is aimed at approximating the terms the parties would have negotiated had they foreseen the circumstances that have given rise to their dispute. The parties want to minimize the costs of performance. The doctrine is designed to do this by reducing defensive expenditures is a reasonable measure to this end, interpolating it into the contract advances the parties’ joint goal.
-The parties to a contract are embarked on a cooperative venture, and a minimum of cooperativeness in the event unforeseen problems arise at the performance stage is required even if not an explicit duty of the contract.
-The the doctrine of good faith's aim is to forbid the kinds of opportunistic behavior that a mutually dependent, cooperative relationship might enable in the absence of rule.
-“Good faith”‘ is a compact reference to an implied undertaking not to take opportunistic advantage in a way that could not have been contemplated at the time of drafting, and which therefore was not resolved explicitly by the parties.
CONCLUSION
-Court reversed summary judgment entered in favor of defendants, lessor trust and individual trustees, and remanded, holding that summary judgment was not proper because when viewing the facts favorably to plaintiffs, lessor partnership and its general partner, whether plaintiffs acted in bad faith in not notifying defendants of a purchase price computation paragraph in the contract bore on plaintiff general partner’s state of mind.
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