Crucial Exams

Multistate Bar Examination Practice Question

A commercial lease gives the landlord "sole and absolute discretion" to refuse consent to any sublease requested by the tenant. The tenant identifies a financially qualified subtenant willing to pay the same rent and requests consent. Hoping to terminate the lease and rent the space to a higher-paying occupant, the landlord refuses consent without giving any reason. The tenant sues, alleging breach of the implied covenant of good faith and fair dealing. Which statement best describes the likely outcome?

  • The landlord is liable because exercising a contractual right in a way that intentionally frustrates the tenant's benefit can breach the implied covenant, even when the contract grants discretion.

  • The landlord is liable only if the tenant can show that the landlord violated a specific express provision of the lease.

  • The landlord is not liable unless the tenant proves the landlord acted fraudulently or for an illegal purpose.

  • The landlord is not liable because the clause expressly grants absolute discretion, and an express term always overrides any implied duty.

Multistate Bar Examination
Contracts
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