Oak Ridge FM, Inc. and Dick Broadcasting Company (DBC) entered into a contract that gave DBC a right of first refusal to purchase all the assets of Oak Ridge’s radio station WOKI-FM. The agreement also provided that: 

No party may assign its rights, interests or obligations hereunder without the prior written consent of the other party, and any purported assignment without such consent shall be null and void and of no legal force or effect.

When DBC asked permission to assign its rights to Citadel Broadcasting Company, Oak Ridge refused because it wanted to make its own deal directly with Citadel. DBC sued Oak Ridge, alleging that it had breached the contract’s implied covenant of good faith and fair dealing. The trial court dismissed the suit on a motion for summary judgment but the Court of Appeals overturned that decision. The Supreme Court of Tennessee agreed to hear the case.

Questions:

1. Is a covenant of good faith and fair dealing implied in this contract? In all contracts?

2. According to the court, what does the implied covenant of good faith and fair dealing protect?

3. How is it possible for approximately half the states to disagree with the Court and not imply a standard of good faith and fair dealing in contracts?

4. What was Oak Ridge’s argument?