Market Street v. Frey

• Market Street Associates Limited Partnership = Plaintiff = lessee = renter = "Market Street" = successor to J.C. Penny's contract
• "Frey" = defendant = lessor = proprietor = trust = successor on the contract to GE (General Electric)
• In 1968, J.C. Penney entered into a sale-leaseback contract with General Electric Pension Trust (defendant).
• Paragraph 34 of the lease entitled the lessee to request the lessor to finance the costs of construction on the property. If negotiations failed, the lease permitted the lessee to re-purchase the commercial property.
• In 1987, Penny assigned the lease to Market Street in Milwaukee, Wisconsin
• Next, Market Street tried to buy back the property from the trust
• The trust (Frey) refused to sell the property for $1,000,000 which the trust deemed too low.

Market Street sued the trust (Frey).

Market Street lost.

Does the duty of good faith prevent 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 & that undermines the parties' cooperative venture?

Richard Posner: Market Street wanted to buy the property for a song.

Yes. If a party takes deliberate advantage of the other party's mistake about its contractual rights, it has violated the duty of good faith.

Reversed