Lexpert Magazine

June 2022 Infrastracture

Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.

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18 www.lexpert.ca CONTRACTING IN GOOD FAITH RECENT CASE LAW AT CANADA'S TOP COURT HAS CULTIVATED A DUTY OF GOOD FAITH IN THE COMMON LAW OF CONTRACT, AND LAWYERS SAY THE DOCTRINE IS OMNIPRESENT IN INFRASTRUCTURE CONSTRUCTION DISPUTES Feature HISTORICALLY, WITH a couple of excep- tions, there has not been a duty of good faith in commercial relationships in Canada, says Dentons partner Karen Martin. One excep- tion is Quebec, which has the duty under its civil code. But in the last eight years, a trio of SCC decisions has developed the common law around how good-faith conduct operates in commercial contracts, and lawyers say this evolution is palpable in infrastructure and construction disputes. "It's a really hot topic right now in construction and infrastructure," says Martin, whose practice includes construc- tion, infrastructure, and public-private part- nerships. "Almost every project that has an issue or dispute, the concept of good faith is being put out there." "ere are few claims that I see nowadays, whether in arbitration or litigation, where a claimant or plaintiff is not making that allegation," says Jason Annibale, co-leader of McMillan LLP's construction and infra- structure group. It began in 2014 with Bhasin v. Hrynew. e dispute involved the non-renewal of a contract between two parties in the educa- tion-savings-plan industry. e plaintiff, Bhasin, alleged that the respondents "improp- erly and dishonestly" used the contractual right of non-renewal to force Bhasin to merge his business with his competitor and claimed there was no "legitimate business reason" not to renew the contract. e main question before the court was whether Canadian common law imposes a duty on parties to perform their contractual obligations honestly. In Bhasin, the SCC said that the common law's treatment of good-faith performance in contracts was "piecemeal, unsettled and unclear." Ruling in favour of Bhasin, the court acknowledged that "good faith contractual performance is a general organizing principle of the common law of contract." e court added that acting honestly in the performance of contractual obligations was a "further manifestation" of that organizing principle.

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