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OH: Disclaimer of Implied Covenants Upheld

By Greg Russell

Based upon a lease's general disclaimer provision, the Court of Appeals for the Fifth Appellate District of Ohio recently affirmed the dismissal of a lessor's claim that a producer had violated the implied covenant to further develop the lessor's property.  See Bilbaran Farm, Inc. v. Bakerwell, Inc., Case No. 12-CA-21 (June 12, 2013).  Among other things, the court observed:

Bilbaran Farm argues the failure to further develop the property is unfair and inequitable.  *** [T]his is waived by the express disclaimer against an implied covenant to develop the property.  As stated in Bushman, '[t]he mere fact that the terms of an executed contract turn out to be unfavorable to one of the parties does not override the fundamental concept in Ohio law that parties enjoy 'freedom of contract' and are bound to the contractual relationship that they create.

For a copy of the case, see here.

Tags: Implied, Covenants, Energy

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