Canadian Lawyer

14 J a n u a r y 2 0 1 5 w w w . C a n a D I a n L a w y e r m a g . c o m A recent Supreme Court of Canada case delved into the issue of the good faith performance of contracts, which had been described by the Law Commission of Ontario as an "unsettled and incoherent body of law." There are some understand- able reasons for the lack of coherence in this area. Among them is my own possibly heretical view that contracts are interpreted and enforced by judges, who are under- standably influenced by instincts to reward good faith. Another is that different areas of commercial activity beget different roles for a principle of good faith. For example, expectations of honest performance may have greater traction and significance where there is an inequality of bargaining power, and where the contract governs a long-term relationship rather than a one-time com- mercial exchange. One further, important reason is a duty of good faith performance intrudes on the principle of the sanctity of contract (which sounds almost religious, harkening back to more jokes where contractual certainty is a higher virtue than honest performance). In Bhasin v. Hrynew, the SCC sought to sew this all together by creating an overarching "organizing principle" of good faith, and specifically a new duty of honest performance, in contract law. The organiz- ing principle of good faith, in the words of the SCC, "is simply that parties generally must perform their contractual duties hon- estly and reasonably and not capriciously or arbitrarily." To be clear, this does not imply an independent, general duty of good faith. Rather, this is simply an organizing principle B a n k I n g o n C o r p o r at E hen the subjects of law and good faith intersect, a common result is lawyer jokes. Over the winter months, for example, there's the old saw that you know it's cold outside when lawyers have their hands in their own pockets. To me, though, the law is all about trustworthiness. In fact, all of my siblings (and I) are trained as lawyers, except one, who is a trained artist. And the lawyer siblings have never trusted the artist because art seems a bit shifty, right? Honesty in contracts and other oxymorons By Neill May W LEXPERT.ca is the online destination for authoritative information about Canada's business of law. COMING SOON! THE NEW AND ENHANCED Bookmark the new LEXPERT.ca for updates on Big Deals/Suits, People Moves and articles of interest appearing in Lexpert ® Magazine. Find information about Canada's leading Lexpert-ranked lawyers and law firms through the site's enhanced navigation and search functionality. Visit LEXPERT.ca Untitled-2 1 2014-11-28 9:37 AM nmay@goodmans.ca o p I n I o n

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