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Supreme Court of Canada Clarifies Duty to Exercise Contractual Discretion in Good Faith | Littler


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 Sewerage and Drainage District (Metro), a corporation that disposed of municipal waste.  The contract provided that waste could be disposed of in three landfills, one of which was much farther away than the others.  Wastech’s profits under the contract were highest when it disposed of waste in the landfill farthest away; the contract provided that Metro had “absolute discre ....

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