Case Citation
Legal Case Name

MARKET STREET ASSOCIATES LTD. PARTNERSHIP v. FREY Case Brief

United States Court of Appeals, Seventh Circuit1991
941 F.2d 588

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Case Brief Summary & Legal Analysis

General Brief
4 min read

tl;dr: A lessee attempted to trigger a bargain purchase option after its financing request was denied. The court reversed summary judgment, holding that a trial was necessary to determine if the lessee breached the duty of good faith by intentionally exploiting the lessor’s ignorance of the option clause.

Legal Significance: This case provides a foundational analysis of the implied duty of good faith in contract performance, defining it as a prohibition against opportunistic behavior—such as exploiting a partner’s oversight—rather than a general duty of candor or altruism, particularly within an ongoing, cooperative contractual relationship.

MARKET STREET ASSOCIATES LTD. PARTNERSHIP v. FREY Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

In 1968, General Electric Pension Trust (the Trust) purchased property from J.C. Penney and leased it back. Paragraph 34 of the lease allowed the lessee to request financing from the Trust for improvements. It stipulated that the Trust must give the request “reasonable consideration” and negotiate in “good faith.” If negotiations failed, the lessee had an option to repurchase the property at a predetermined price, which was now significantly below market value. In 1987, Market Street Associates (MSA) became the lessee. After failing to secure outside financing for a project, MSA decided to invoke Paragraph 34. MSA’s principal, Orenstein, sent letters requesting financing but did not specifically mention Paragraph 34 or the purchase option. The Trust, appearing unaware of the clause’s implications, rejected the request, stating it did not meet its current investment criteria for loan size. After receiving the rejection, MSA promptly exercised its option to purchase the property at the bargain price. The Trust refused to sell, and MSA sued for specific performance. The district court granted summary judgment for the Trust, finding MSA acted in bad faith.

Court Holding & Legal Precedent

Issue: Does a contracting party breach the implied duty of good faith and fair dealing by failing to explicitly remind the other party of a relevant contract term in an attempt to take advantage of the other’s oversight during the performance stage of the contract?

Reversed and remanded. The court held that summary judgment was improper because Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident,

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IRAC Legal Analysis

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Legal Issue

Does a contracting party breach the implied duty of good faith and fair dealing by failing to explicitly remind the other party of a relevant contract term in an attempt to take advantage of the other’s oversight during the performance stage of the contract?

Conclusion

The case establishes that the duty of good faith polices opportunistic exploitation Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in

Legal Rule

The implied covenant of good faith and fair dealing requires that parties Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure

Legal Analysis

Judge Posner, writing for the court, framed the duty of good faith Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempo

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Flash Summary

  • The duty of good faith in contract performance prohibits taking deliberate,
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur.

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