No Inherent Duty to Negotiate in Good Faith
The Middle Section Court of Appeals this week restated that Tennessee does not recognize a duty to negotiate in good faith unless the parties expressly contract for one. In Barnes & Robinson Co., Inc. v. OneSource Facility Servs., Inc., the parties agreed they would negotiate for the buyer to purchase assets and franchises from the seller. The two sides also agreed that the buyer would pay $10,000 as a down payment at the outset of negotiating, and another $90,000 on signing of a definitive purchase agreement. The deal apparently fell through at some point, and the buyer sued for (among other things) the seller's breach of duty to negotiate in good faith. The trial court dismissed the claim, and the Court of Appeals affirmed, saying there was no express contractual agreement that negotiations would be conducted in good faith, so the seller had no affirmative duty to do so.
In a nutshell: in Tennessee, a "contract to make a contract" is not worth much unless it expressly states states that the parties will negotiate with each other in good faith.
Note my earlier post on this topic based on a similar ruling from the Eastern District Court of Appeals.