Canadian Lawyer InHouse

9 CANADIANLAWYERMAG.COM/INHOUSE SEPTEMBER 2015 A roundup of legal department news and trends and says gone are the days when the courts would confine the parties to the strict terms of their contractual agreement. "To my mind, this is a trend we're now starting to see, combined with the Sattva decision, in which greater deference is being paid to trial judges regarding how they are to interpret contracts, and contractual inter - pretation will be given greater deference on the basis it is now a question of mixed fact and law," he says, referencing Sattva Capital Corp. v. Creston Moly Corp. He says the trend may lead to greater un - certainty for in-house lawyers and their ex- ternal counsel as it makes it more difficult to provide advice and an assessment of the risks to parties to contracts. "Now, there are going to be certain ef- forts and arguments that can be marshalled in favour of an aggrieved or perceived ag- grieved party to seek the assistance of the court," he says. "In this case, it was a fact of trying to say, 'Well, it was an implied term that we would be entitled to certain confidential pricing in - formation' and the other party to the contract said, 'Wait, that's not actually stipulated in our bargain. It's not part of the agreement that we had to hand over confidential information to you in order for you to exercise the option.'" The court decided it was an implied term that, in order for the party to determine whether it wanted to exercise the option, it should be entitled to this confidential infor - mation so it could properly assess the eco- nomics of doing so. The court found the term should be in- serted into the agreement. The Court of Appeal referenced the test in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. that dealt with implied terms. In that case, Justice Frank Iacobucci said: "As ob - served by the application judge, a contractual term may be implied 'on the basis of the pre- sumed intentions of the parties where neces- sary to give business efficacy to the contract or where it meets the 'officious bystander test.' "What is important in both formulations [the business efficacy test and the 'officious bystander test'] is a focus on the intentions of the actual parties. A court, when dealing with terms implied in fact, must be careful not to slide into determining the intentions of reasonable parties . . .." Lederman says that while lawyers draft - ing contracts will want to be more precise in the language of a contract, it doesn't mean they will ever be ironclad. "Even if you put an entire agreement clause into your contract, that doesn't nec - essarily save you holus bolus from having an implied term put into it and it certainly doesn't act to preclude a requirement that you have to perform in good faith," he says. "So you couldn't put a clause in your agreement that says, quite apart from the terms of this agreement or what the Supreme Court has said in Bhasin, the parties are not required to perform any of these obligations in good faith because, in Bhasin, the court was clear you can't contract out of this un - derlying duty of honest performance." IH Dedication, knowledge and creativity. Henein Hutchison draws its power from experience and its talent from a team of rising stars. The firm's associate ranks include three clerks of the Supreme Court of Canada and one clerk of the Court of Appeal for Ontario. Experience and depth. More experience. More defence. | www.hhllp.ca E N O U G H TA L E N T TO F I L L A R O O M . Untitled-3 1 14-04-30 12:44 PM

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