Brooklyn Bagel Boys v. Earthgrains Refrigerated Dough Prods. - 212 F.3d 373 (7th Cir. 2000)

Rule:

Under Illinois law, the covenant of good faith and fair dealing is not an independent source of duties for the parties to a contract. 

Facts:

Plaintiff-Appellant Brooklyn Bagel Boys, Inc. ("Brooklyn Bagel"), a producer of bagels for third parties who sold them under their own brand name, entered into a contract with Defendant-Appellee Earthgrains Refrigerated Dough Products, Inc. ("Earthgrains"), who manufactured, distributed, and sold refrigerated dough products. Under the contract, Brooklyn Bagel agreed to process and package bagels for Earthgrains. The contract continued until Earthgrains decided to begin manufacturing its own bagels. Earthgrains sent Brooklyn Bagel notice of termination of the contract and stopped ordering bagels from Brooklyn Bagel. Brooklyn Bagel brought this diversity action against Earthgrains, claiming that Earthgrains wrongfully terminated a contract for the supply of bagels. 

Issue:

Did Earthgrains breach its implied duty of good faith and fair dealing by not ordering bagels during the ninety-day termination notice period?

Answer:

No.

Conclusion:

The court found that the parties did not enter into a requirements contract, and Brooklyn Bagel failed to establish any breach of contract. There was nothing in the contract that prohibited Earthgrains from manufacturing its own bagels, and Brooklyn Bagel did not show that this reasonably could not have been contemplated by the parties. Also, the granting of Earthgrains’ motion to strike the certification did not constitute an abuse of discretion.