On November 13, 2014, the Supreme Court of Canada released its
much anticipated decision in Bhasin v. Hrynew, 2014 SCC 71.
In its decision, the Supreme Court of Canada for the first
time expressly recognized "good faith" as an organizing
principle in the operation of contract law in Canadian common law
provinces. This is a significant alteration to the law of
contracts in the common law jurisdictions of Canada. We
expect that Bhasin will become known as one of
the seminal decisions in Canada in relation to the performance of
The Supreme Court of Canada's alteration or what they called
an "incremental step" to the law of contracts was to
acknowledge good faith contractual performance as a general
organizing principle of the common law of contract. This
principle "underpins and informs" the various contractual
doctrines which govern contracts in Canadian law. The
Court differentiated an "organizing principle" from a
specific legal doctrine. An organizing principle is a
standard which underlies legal doctrines and which may be used to
determine how those doctrines operate. It is flexible and may
be given different weight in different situations. The Court
found that good faith was a standard by which existing legal
documents should be interpreted and also that by recognizing good
faith as an organizing principle, it would allow the common law of
contract to be developed in a more coherent and principled
Each year Lisa A. Peters reviews judgments dealing with
contract law issues focusing on decisions of relevance to
commercial lawyers and business leaders. This year, her annual
seminar will examine topics including the contractual duties of
good faith in light of this recent decision. The seminar is
scheduled to take place on December 10. If you would like to
register or would like more information, please email Mary Merraro
at email@example.com. Seating is
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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