www.lexpert.ca | LEXPERT • December 2015 | 13
GOOD FAITH
define or delimit them in a particular context so long as they
maintain the minimum standard that a particular duty implies.
"Although the decision doesn't give any specifics about when
the parties can try to limit the need to communicate honestly, I
do think it will change the way contracts are draed," Lederman
says. "For example, lawyers might expand on absolute discretion
by expressly stating that a right can be exercised for any reason
at all or that no reason need be given for the exercise of a right."
Certainly, the duty of good faith has impacted draing and
negotiating practice in the various states, including New York,
California, Texas and Illinois, which have espoused the duty in
their laws — in some cases for almost a century. It seems likely,
then, that Bhasin will tend to complicate contract negotiations
in Canada.
"What I'm starting to notice is that Bhasin is becoming a top-of-
mind issue for in-house counsel, both when they're entering into
contracts and when they're making the decision to terminate them,"
Berman says.
ACCORDING TO LARRY LOWENSTEIN
of Osler, Hoskin & Harcourt LLP in Toronto,
that's not necessarily a good thing.
"Parties will have to dra with precision on a
point that was not previously problematic," he
says. "is sets off rounds of defensive lawyer-
ing that clients find difficult to understand and
could produce results with which clients may
find it difficult to comply."
As Lowenstein sees it, however, the draing
problems aren't the worst of it. "I just hope that
this court, with the best of intentions, hasn't
set us on a road to hell," he says. "Because even
though the court may have intended its decision
to be incremental, it has unwittingly unleashed something that
the litigation Bar will feast on for at least a decade."
e law regarding good faith was well established, at least in
Ontario, says Lowenstein. Instead of creating an open-ended
principle, he says, the court could have adopted a framework that
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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
"SOMETIMES there was a duty of good faith,
sometimes there wasn't, sometimes it was implied,
sometimes it was statutory, sometimes it was a matter
of contractual interpretation. But in the end, you couldn't
give the clients definitive advice on whether such a duty
existed. Now at least we know that all contracts are
subject to a 'general organizing principle' of good faith."
Wendy Berman Cassels Brock & Blackwell LLP
