No. You can't be sued for being 'unfair' when you are just following the clear rules of the contract you both signed. The contract plainly said United could cancel for any reason. The unwritten 'play fair' rule doesn't get to erase the actual words in the agreement. It's not illegal or maliciously sneaky to end a deal to save money; that's just business. Saucy Sisters should have expected that United could use the cancellation clause that was written in black and white.

Yes. This was unfair. Because Saucy Sisters had to spend a ton of money to even start the job, they had a reasonable expectation that United wouldn't just drop them for a slightly better deal. The 'play fair' rule should have stopped United from using the cancellation clause in a way that was so hurtful and went against the spirit of their long-term agreement. The contract didn't specifically say 'cancel for no good reason,' so the court should have made sure the reason was fair.

Yes, United could end the contract for any reason because that's what the contract clearly allowed. The implied promise to be fair doesn't override the clear words of the contract under Illinois law. Saucy Sisters didn't prove United ended the contract in a really unfair way with bad intentions.

The contract didn't clearly say it could be canceled for literally any reason, so it should include the implied promise of fairness. The two sides probably expected to treat each other fairly. If United ended the contract early just to get a better deal with someone else, that wouldn't be fair to Saucy Sisters. The jury should get to decide if United acted unfairly, so saying United wins without a trial was wrong.

We review the denial of a motion for summary judgment de novo, and will reverse it if there are no material facts in dispute and the moving party was entitled to judgment as a matter of law

—applying Illinois law when contract provided that disputes would be governed by the laws of Illinois

—the implied covenant acts to "guide the construction of contracts without creating independent duties for the contracting parties

As when parties agree to be bound by the law of another jurisdiction, we faithfully apply Alaska law by honoring the secular rules by which the parties have chosen to be bound

Indeed, even those jurisdictions recognizing an implied covenant of "good faith and fair dealing" in special circumstances have been unwilling to extend the covenant to the franchisor-franchisee relationship

Dissent reasoned that, because the provision cited by majority did not expressly permit termination without cause, the implied covenant imposed reasonable restrictions on the parties.

Illinois courts have never held the implied covenant to require good cause or a legitimate business reason for terminating a contract with an express no-cause termination provision

No. The implied covenant of good faith and fair dealing does not prevent a party from exercising an unambiguous right to terminate a contract without cause. Under Illinois law, the implied covenant cannot modify or override the express terms of a contract. The termination clause was clear and unambiguous, giving either party an 'unfettered right to terminate at will.' While the covenant may protect against 'opportunistic advantage-taking,' such as a malicious effort to drive a party out of business, it does not require a party to have a legitimate business reason for termination. Terminating a contract to pursue a more profitable arrangement does not constitute the kind of subjective bad faith that would violate the implied covenant. Therefore, Saucy Sisters could not have a reasonable expectation of anything other than what the contract expressly provided: termination for any reason or no reason upon ninety days' notice.

Yes. The implied covenant of good faith and fair dealing should limit the exercise of a termination clause to be consistent with the parties' reasonable expectations. The clause does not explicitly state it can be exercised 'without cause,' leaving it open to interpretation. Given Saucy Sisters' substantial capital investment made in reliance on a three-year term, it was a reasonable expectation that United would not terminate the contract arbitrarily simply to secure better terms with a competitor. The covenant should prevent a party from abusing its contractual discretion in a manner that is inconsistent with the justified expectations of the other party, and United's actions here violated that principle.

Yes. Under Illinois law, the contract could be terminated at will, and the implied covenant did not require United to have a legitimate business reason for termination because the contract contained an express no-cause termination provision. The court applies Alaska law by honoring the secular rules by which the parties have chosen to be bound, including the choice of Illinois law for governing disputes. The settled rule in Illinois remains that a contract expressly terminable at will may be ended for any reason or no reason at all, because no obligation can be implied which would be inconsistent with and destructive of the unfettered right to terminate at will. While some Illinois precedent hints that the implied covenant might apply to prohibit termination specifically motivated by bad faith and accompanied by unfair tactics, Saucy Sisters neither alleged nor proved this kind of 'opportunistic advantage-taking.'

The termination clause in this contract, since it does not expressly state that cancellation could be on any basis whatsoever, should be construed to incorporate the covenant of good faith and fair dealing. The parties intended to operate in an atmosphere of good faith and fair dealing, and either party could terminate the contract for no cause if the reason for termination was consistent with the parties' reasonable expectations. Early termination by United motivated by a desire to contract with a competitor on better terms would have contradicted the justified expectations of Saucy Sisters. Whether United in fact acted with an impermissible motive was properly a question for the jury, so summary judgment for United was correctly denied and the judgment on liability should be affirmed.

United Airlines, Inc. v. Good Taste, Inc.

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