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Callow, which expanded a contracting party’s duty of honesty, was released in December 2020; however, the SCC’s decision in Wastech, which clarifies the duty to exercise contractual discretion in good faith, was not released until early this month.  Although Wastech involved a commercial contract, it has implications for all contracts in which a party has discretionary power, including any such contracts entered into by employers. Background In 1996, Wastech Services Inc., a waste transportation company, entered into a long-term contract for waste disposal with the Greater Vancouver Se...

Since 2014, the Supreme Court of Canada has recognized that all commercial contracts must be performed honestly, in accordance with the principle of good faith: Bhasin v. Hyrnew, 2014 SCC 71 and...

In its recent decision in What you need to know The Court held that the organizing principle of good faith requires that, where a contract gives a party the ability to make a discretionary decision, the party must exercise that discretion reasonably in light of the bargain the parties made. The Court held that the duty to exercise discretion reasonably is imposed externally on the contractual relationship, and therefore the parties cannot contract out of it. This means that The Court heard this case at the same time as CM Callow Inc. v. Zollinger (CM Callow), which considered the duty of...

Background Wastech Services Ltd. (Wastech) moves and disposes of waste. In 1996, Wastech and the Greater Vancouver Sewerage and Drainage District (Metro) entered into a 20-year contract for the disposal of waste from the Greater Vancouver Regional District (the Contract). Wastech agreed to remove and transport waste to three disposal facilities. Metro was responsible for allocating where the waste was to be disposed. The volume of waste allocated to each facility was a critical variable in calculating Wastech's compensation. In 2010, Metro significantly redirected the volume of waste between ...

The Supreme Court of Canada has waded into a dispute about garbage in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District.