Question
Ernst and Barbara Larese entered into a ten-year franchise agreement with Creamland Dairies, Inc., in 1974. The agreement provided that the franchisee shall not assign,
Ernst and Barbara Larese entered into a ten-year franchise agreement with Creamland Dairies, Inc., in 1974. The agreement provided that the franchisee "shall not assign, transfer or sublet this franchise, or any of [the] rights under this agreement, without the prior written consent of Area Franchisor [Creamland] and Baskin Robbins, any such authorized assignment, transfer or subletting being null and without effect." The Lareses attempted to sell their franchise rights in February and August 1979, but Creamland refused to consent to the sales. The Lareses brought suit, alleging that Creamland had interfered with their contractual relations with the prospective buyers by unreasonably withholding its consent; they held that Creamland had a duty to act in good faith and in a commercially reasonable manner when a franchisee sought to transfer its rights under the franchise agreement. Creamland contended that the contract gave it an unqualified right to refuse to consent to proposed sales of the franchise rights. Which party should prevail?
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