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ARTICLE · 19 JANUARY 2022

Business Context Matters When Assessing Good Faith

Torkin Manes LLP
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Parties to a commercial contract owe one another a duty of good faith. In the past few years, a trilogy of decisions from the Supreme Court of Canada has established that the good faith principle includes:

CanadaCorporate/Commercial Law
Marco P. Falco
Marco P. Falco
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Parties to a commercial contract owe one another a duty of good faith.  

In the past few years, a trilogy of decisions from the Supreme Court of Canada has established that the good faith principle includes: 

(i) A duty of honest contractual performance, in which parties cannot lie or otherwise mislead each other regarding matters relating to the performance of the contract: Bhasin v. Hrynew, 2014 SCC 71; C.M. Callow v. Zollinger,  2020 SCC 45; and

(ii) A duty to exercise any contractual discretion reasonably, in accordance with the purposes for which the discretion was granted under the contract: Wastech Services Ltd. v. Greater Vancouver Sewage and Drainage District,  2021 SCC 7.

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