On February 5, 2021, the Supreme Court of Canada released its judgment in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District.[1] Wastech clarifies the nature and scope of the duty to exercise discretionary contractual powers in good faith. The appeal was heard together with C.M. Callow Inc. v. Zollinger[2] (see our earlier blog post), which clarified the duty of honest performance established in Bhasin v. Hrynew[3] (see our earlier blog post).
What you need to know
Wastech holds that:
- Contracting parties have a duty to exercise contractual discretion in good faith.[4] This duty “operates in every contract irrespective of the intentions of the parties”.[5]
- The duty requires parties to exercise their contractual discretion “in a manner consistent with the purposes for which it was granted in the contract” — i.e., “reasonably”.[6] This duty can be breached
