Developments in Contract Law: The 2020-2021 Term – Appeals to Fairness

This article analyzes important developments in Contract Law stemming from consideration by the Supreme Court of Canada in 2020-2021. Due to the large number of Contracts cases during this period, the article focuses on prominent appeals occupied with issues of fairness in Canadian Contract Law. Fairness in contracts emerges as an important concern of the SCC at this juncture. This appropriately reflects the constellation of some long-unsolved problems (e.g., control of unfair terms in standard form contracts), confusion around key concepts associated with protection of contractual fairness (e.g., unconscionability and good faith), and judicial disagreement over the merits of general versus context-specific approaches to policing fairness in contracts (e.g., unconscionability versus public policy, and whether to consolidate or differentiate how the concepts of unconscionability and good faith apply to different contexts falling within each’s overall jurisdiction)

You’ve Got to Have (Good) Faith: Good Faith’s Trajectory in Anglo-Canadian Contract Law Post-Wastech and the Potential for a Duty to Renegotiate

This paper argues that the organizing principle of good faith should be judicially developed to include a duty to renegotiate in situations of hardship. It looks to the French Civil Code and the UNIDROIT Principles for guidance, in addition to Canadian law’s receptibility to an incrementally expanded principle of good faith. Although the Supreme Court of Canada rejected hardship in the 2018 case of Churchill Falls (Labrador) Corp v Hydro-Québec, it did not forever close the door to this doctrine in Québec in situations of true financial peril. Given the “judicial dialogue” between Québec civil law obligations and Anglo-Canadian contract law, not to mention the Supreme Court of Canada’s increasingly expansionist approach, this illustrates a slight opening for the recognition of hardship in Anglo-Canadian contract law as well. Prior to proposing a test for the duty to renegotiate, the paper assesses the trajectory of good faith in Québec civil law and Anglo-Canadian contract law, in particular the duty to exercise a discretion in good faith and abuse of contractual rights. Given the law’s trend in an increasingly moral and interventionist direction, this paper argues that the time is ripe to allow for a duty to renegotiate in good faith where parties experience contractual hardship. Dans le présent article, nous soutenons que le principe organisateur de la bonne foi devrait être développé judiciairement pour inclure une obligation de renégociation dans les situations de « hardship ». Il s’inspire du Code civil français et des principes d’UNIDROIT, ainsi que de la réceptivité du droit canadien à un principe de bonne foi progressivement élargi. Bien que la Cour suprême du Canada ait rejeté le « hardship » dans l’affaire Churchill Falls (Labrador) Corp c. Hydro-Québec en 2018, elle n’a pas fermé à jamais la porte à cette doctrine au Québec dans les situations de véritable péril financier. Compte tenu du « dialogue judiciaire » entre les obligations de droit civil québécois et le droit des contrats anglo-canadien, sans compter l’approche de plus en plus expansionniste de la Cour suprême du Canada, cela illustre une légère ouverture pour la reconnaissance du « hardship » en droit des contrats anglo-canadien également. Avant de proposer un test pour l’obligation de renégocier, nous examinons la trajectoire de la bonne foi en droit civil québécois et en droit des contrats anglo-canadien, en particulier l’obligation d’exercer un pouvoir discrétionnaire de bonne foi et l’abus des droits contractuels. Compte tenu de la tendance du droit à s’orienter de plus en plus vers la morale et l’interventionnisme, le présent article soutient que le moment est venu de permettre une obligation de renégociation de bonne foi lorsque les parties éprouvent des difficultés contractuelles

Developments in Contract Law: The 2021-2022 Term — The Enduring Allure of Freedom of Contract

A review of recent developments in Contract Law reveals that Freedom of Contract continues to thrive in the jurisprudence a half-century after its supposed fall. As the analysis here shows, it is a theme which animates not only general thinking about contracts, but also court resolution of specific cases and issues. High-level considerations drive the reasoning, colouring the application of more detailed rules where these exist. And among these high-level considerations, Freedom of Contract enjoys privileged status as the default law, against which opposing considerations in practice must justify themselves as exceptions. Other considerations vary in their power to constrain Freedom of Contract. Notably, among the significant constraints are where the Freedom is complicated by an asymmetric distribution or opposing concerns about loss of wider or future freedom. Freedom is not the only value to be reckoned with. However, its abiding influence over resolution of legal problems in the area of contracts is remarkable. Arguably, the continued centrality of Freedom of Contract in modern society is surprising in light of the prevalence of circumstances such as standard form contracting and relational contracting which are not well-modelled by Freedom of Contract. This suggests that Freedom of Contract remains essential to us not as a fact, but as an idea — as a way that we like to think about contracts and issues arising in the domain of what we call Contract Law