Contract Law Update - Developments Of Note 2015

I have been preparing this annual review of contract law cases relevant to commercial practice since 2009. Last year (2014) was an exceptional year because the Supreme Court of Canada ("SCC") issued several blockbuster decisions influencing contract law. My paper last year was published in two instalments, with the second instalment dealing exclusively with the SCC decision in Bhasin v. Hrynew.

I have attached as an appendix a list of topics covered in prior updates. Those updates are all available on Lawson Lundell LLP's website under my profile ( www.lawsonlundell.com/team-Lisa-Peters.html ).

We find ourselves in a world where many contract law principles have been settled or clarified by SCC jurisprudence over the last decade. To refresh your memory, some of the key SCC decisions (and their subject matters as they pertain to contract law) are:

Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53: Confirmed that a question of contract interpretation is a question of mixed fact and law and that the surrounding circumstances (or factual matrix) are to be considered in every contract interpretation exercise, not just where there is an ambiguity. Bhasin v. Hrynew ("Bhasin"), 2014 SCC 71: Articulated the new duty of honesty in contractual performance (not to lie or mislead the other party about one's contractual performance) and mapped out an overarching organizing principle of good faith. Payette v. Guay, 2013 SCC 45: Confirmed that restrictive covenants in commercial contracts (particularly where there was no imbalance of bargaining power and the parties had professional advisors) are not as rigorously scrutinized as restrictive covenants in employment contracts. Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) ("Tercon"), 2010 SCC 4: Enunciated a three-part test for assessing whether a party can escape the effect of an exclusion clause (or similar exculpatory clause). Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6: Clarified that notional severance is not an appropriate mechanism to cure a defective restrictive covenant. Jedfro Investments (U.S.A.) Ltd. v. Jacyk, 2007 SCC 55: Explained that the fact parties have ignored an agreement or treated it as abandoned will not result in the agreement being discharged unless it can be shown that the parties, by their conduct, agreed to a new contract in substitution for the old. Transport North American Express Inc. v. New Solutions Financial Corp., 2004 SCC 7: Propounded a technique of "notional severance" (a method of reading down more liberal than the traditional "blue-pencil approach") for severing illegal provisions in contracts, particularly contract provisions that provide for a criminal interest rate. Hamilton v. Open Window Bakery Ltd., 2004 SCC 9: Clarified how damages for breach of contract are assessed in a scenario where a defendant who wrongfully repudiated a contract had alternative modes of performing. In this scenario, the performance mode adopted (and on which damages are based) is the mode least profitable to the plaintiff and least burdensome to the defendant. Semlhago v. Parmadevan, [1996] 2 S.C.R. 415 and Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51: Clarified when specific performance is available as a remedy and the interaction of the duty to mitigate with a claim for specific performance. London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 288 and Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108: Articulated the "third party beneficiary" or principled exception to the doctrine of privity. From the perspective of commercial certainty, this abundance of SCC guidance is a good thing. From the perspective of this writer, it has made it more difficult to find cases foreshadowing or illustrating significant changes in contract law as it applies to commercial transactions.

But that does not mean there is nothing to talk about. As always, I reviewed...