## Facts

- Old Orchard West Venture acquired a commercial parcel in Skokie, Illinois, with LaSalle National Bank holding legal title as trustee.
- A prior sales contract with an adjacent landowner failed after an environmental investigation found contamination and the parties could not agree on a price reduction.
- The Sellers later contracted to sell the parcel to Greer Properties, Inc. for $1,250,000.
- The contract placed environmental remediation responsibility on the Sellers and permitted termination if, in the Sellers’ “best business judgment,” the cleanup required made the transaction “economically impracticable.”
- After obtaining an environmental assessment estimating substantial cleanup costs, the Sellers received a renewed, higher offer from the earlier potential buyer.
- The Sellers terminated the Greer contract one day after receiving that renewed offer, invoking the “economically impracticable” cleanup clause.
- Greer sued, alleging improper termination and lack of good faith; the district court granted summary judgment for the Sellers.

## Issues

1. Whether the contract’s “economically impracticable” clause validly granted the Sellers broad discretion, based on their business judgment, to terminate due to anticipated cleanup costs.
2. Whether the Sellers’ discretion to terminate was limited by an implied duty of good faith and fair dealing.
3. Whether the summary-judgment record created a genuine dispute of material fact as to the Sellers’ good faith in terminating the contract.

## Decision

- The court held that the contract granted the Sellers substantial discretion to determine economic impracticability according to their “best business judgment.”
- The court rejected the argument that the termination clause was illusory or unenforceable merely because it used a subjective business-judgment standard.
- The court held that the Sellers’ discretion remained constrained by the implied covenant of good faith and fair dealing.
- The court ruled that circumstantial evidence—particularly the timing of termination immediately after a renewed higher offer and evidence of possible pretext—could support an inference of bad faith.
- The court affirmed in part, reversed in part, and remanded because good faith and motive presented triable fact questions.

## Legal Principles

- A contract may confer broad discretionary authority (including “business judgment” discretion) without being illusory when the law implies a duty to exercise that discretion honestly.
- Under Illinois contract law, the implied covenant of good faith and fair dealing limits the exercise of contractual discretion and termination rights.
- A party may not use a discretionary termination clause as a pretext for opportunistic escape from the agreement rather than for reasons tied to the contract’s stated standard.
- Summary judgment is improper when intent, motive, and good faith are disputed and reasonable inferences from circumstantial evidence could support either side.

## Conclusion

The court enforced the contract’s discretionary termination framework for environmental cleanup impracticability but held that the Sellers’ good faith in invoking that discretion was genuinely disputed, requiring remand for factfinding on motive and pretext.


Greer Props., Inc. v. LaSalle Nat’l Bank, 874 F.2d 457 (7th Cir. 1989)