Duty of Good Faith in Common Contract Law Prevailing in Infrastructure Construction Disputes
In Bhasin, the SCC said the common law treatment of good faith performance in contracts was “fragmentary, uncertain and unclear”. Ruling in favor of Bhasin, the court recognized that “good faith contractual performance is a general organizing principle of common contract law”. The court added that acting honestly in the performance of contractual obligations was a “further manifestation” of this organizing principle.
“We lawyers didn’t know what that meant,” Martin says. “What is an organizing principle? Either there is a clause in the contract which is written, or there is a clause in the contract which is implied.
She says the concept was particularly interesting for the infrastructure and construction industry, where contracts tend to be long-term, governing relationships that span years.
“So when this case came out, it really caused ripples in the infrastructure and construction industry. What does this mean for infrastructure projects?
Previously, lawyers could assume that if the contract included things like secrecy clauses or renewal rights, they could tell clients they had the right “to act in a discretionary and self-interested manner”, says David Little , partner at Bennett. Jones LLP in Vancouver whose practice involves construction and infrastructure.