F. Conclusion

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 806-809

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Although the frequency with which the Canadian common law judiciary has discussed the recognition of a generalized duty of good faith

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performance in contract law suggests that there exists some momentum in the direction of embracing the doctrine, an examination of the ratio decidendi in the leading cases indicates that it would be premature to proclaim that this event has occurred. In particular, there is, as yet, little or no evidence of a willingness on the part of the Supreme Court of Canada to recognize the existence of the doctrine in a generalized form. The reasons for this judicial hesitation are a matter of speculation. It may be that it is accepted that Canadian common law can adequately meet problems of bad faith by deploying existing doctrines. Indeed, as the cases analyzed in section C of this chapter indicate, there is a plausible basis for this view. Alternatively, or additionally, it may be that there is judicial concern about the alleged uncertainty of good faith or the dangers of foreign borrowings.

Concerns about the vagueness or uncertainty of the doctrine may recede, however, when one examines the actual cases in which the doctrine has been considered to be applicable by Canadian common law judges. These cases appear to fall into a recognizable pattern resting on three established principles of contractual interpretation. Agreements have, in the past, often been construed to impose implied obligations to cooperate in the accomplishment of the objectives of the agreement,⁸³

to exercise contractually conferred discretionary powers for the intended purpose⁸⁴and, less frequently perhaps, to refrain from evading contractual duties by doing indirectly what one agreed not to do directly.⁸⁵Unpacking the duty of good faith in this fashion suggests that it is more reckonable than may be feared and that the main effect of a recognition of the doctrine would be simply that of giving expression to an underlying theme in the existing law of contractual interpretation. If and when a recognition of the general duty occurs, it will likely be discovered that not very much has changed in the Canadian common law of contract. Recognition of a good faith duty may facilitate the implication of terms in contracts more aggressively than the traditional doctrines on implied terms would permit. It may also provide a firmer basis than we now have for argument by analogy from the existing categories of good faith cases. Such...