Court Rules Good Faith Implied in Assignment Consent Agreements

The Tennessee Supreme Court ruled that where contracting parties have agreed to allow assignment of a contract with the consent of the non-assigning party, and the agreement is silent regarding the anticipated standard of conduct in withholding consent, an implied covenant of good faith and fair dealing requires the non-assigning party to act with good faith and in a commercially reasonable manner in deciding whether to consent to the assignment. In the case of Dick Broadcasting Company, Inc. v. Oak Ridge FM, Inc., the Court overturned the trial court’s opinion and ruled in favor of DBC that the duty of good faith and fair dealing applied to the right of first refusal agreement. A separate concurring opinion was filed by Justice William Koch.