Business Law 5th Edition by David Twomey ,Marianne Jennings ,Stephanie Greene

Exercise 14

Norwest Bank had been lending money to Tresch to run a dairy farm. The balance due the bank after several years was $147,000. The loan agreement stated that Tresch would not buy any new equipment in excess of $500 without the express consent of the bank. Some time later, Tresch applied to the bank for a loan of $3,100 to purchase some equipment. The bank refused to make the loan because it did not believe the new equipment would correct the condition for which it would be bought and would not result in significant additional income. Tresch then sued the bank, claiming that its refusal to make the loan was a breach of the implied covenant of good faith and fair dealing. Decide. [Tresch v Norwest Bank of Lewistown, 778 P2d 874 (Mont)]