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Contracts Keyed to Frier
Baker v. Bailey
Facts
He Bakers and the Baileys entered into a Water Well Use Agreement (Agreement) to ensure the Baileys had access to water. The Agreement was made solely for the Baileys’ benefit and was to terminate once the Baileys ceased to occupy the land. The Agreement did not reflect this reasoning. The Agreement also gave the Bakers the right of first refusal. The Baileys sought to sell their property. The Bakers informed the Baileys that they would not be transferring water rights to any subsequent owners. The Baileys were therefore forced to sell their property for $8,000.00, although the land with water would have been worth about $47,500.00. The Bakers then exercised their right of first refusal and purchased the property from the Baileys for $8,000.00. The Bakers subsequently brought suit against the Baileys for unpaid expenses. The Baileys countersued for breach of the Agreement. The District Court of the Fourth Judicial District in Minnesota County found the Bakers breached the implied covenant of good faith and fair dealing. The Bakers appealed.
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