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Appellate Court Declines Look at Subjective 'Good Faith' in Contract

By Todd Kennard and Douglas M. Mansfield

The Supreme Court of Ohio recently held that a court cannot make a subjective inquiry into a gasoline distributor's motives in setting price levels where the prices were both commercially reasonable and nondiscriminatory, notwithstanding the plaintiffs' allegations that the prices were set at a level to try to force them out of business. See Casserlie et al. v. Shell Oil Co., et al. (2009), 121 Ohio St.3d 55, 902 N.E.2d 1.

In a dissent, one justice challenged whether Ohio law had created a safe harbor for gasoline distributors through the public posting of their prices to their dealers. The justice wrote “[a]fter this opinion becomes public, all franchisees in Ohio should watch their wallets very carefully because their franchisors will no longer be held to subjective good-faith standards.”

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