Honour Among Businesspeople: The Duty of Good Faith and Contracts in the Energy Sector

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Volume 53, No 2 ISSN: 1925-8356   |   Courtesy of Canadian Energy Law Edition   |    View Original

Authors: Brandon Kain, Craig Spurn, Séan C. O’Neill, Justin H. Nasseri

The recognition of a “duty of good faith” was a contentious issue for Canadian courts for many years, despite its recognition in other jurisdictions. In 2014, the Supreme Court of Canada recognized that parties to a contract have a duty to perform all contractual obligations in good faith. This article explores the history behind the “duty of good faith,” the consequences of the Supreme Court’s decision, and the impacts of the decision. This article also examines the effects of the decision as they relate to contracts fashioned in the energy sector, specifically in relation to rights of first refusal (ROFRs), authorizations for expenditure, and accounting and remittance of production sales proceeds.

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