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ARTICLE · 16 SEPTEMBER 2019

Supreme Court To Revisit Good Faith

On June 26, 2019, the Supreme Court of Canada (SCC) granted leave to appeal the Ontario Court of Appeal's decision in CM Callow Inc. v. Zollinger (Callow),

CanadaLitigation, Mediation & Arbitration

On June 26, 2019, the Supreme Court of Canada (SCC) granted leave to appeal the Ontario Court of Appeal's decision in CM Callow Inc. v. Zollinger (Callow),1 a case involving the scope of the organizing principle of good faith and related duty of honest performance. The case will require the SCC to revisit these issues for the first time since 2014.

Legal background

In 2014, the SCC recognized in Bhasin v. Hyrnew,2 that there was an "organizing" principle in contract law. The SCC provided a broad framework for the application of the good faith principle, and established a universal duty of honest performance in contractual relationships as an aspect of good faith. However, within that the broad framework of good faith, much uncertainty remained. One aspect of uncertainty was to what extent good faith can supplement, modify or qualify bargained for contractual rights. This has been illustrated in the context of contractual termination rights since 2014.

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