How have the courts in Canada treated the duty of good faith in a commercial contract?

The comments of O’Connor A.C.J.O. in Transamerica Life v. ING[iii] are of assistance. He noted, “It is fair to say that Canadian courts have proceeded cautiously in recognizing duties of good faith in the performance and enforcement of contracts. Interestingly, when Canadian courts have referred to duties of good faith, they have done so in circumstances where the result of the case has been determined by the application of other, more established, legal principles…Canadian courts have not developed a comprehensive and principled approach to the implication of duties of good faith in commercial contracts…The implication of a duty of good faith has not gone so far as to create new, unbargained-for, rights and obligations. Nor has it been used to alter the express terms of the contract reached by the parties. Rather, courts have implied a duty of good faith with a view to securing the performance and enforcement of the contract made by the parties, or as it is sometimes put, to ensure that parties do not act in a way that eviscerates or defeats the objectives of the agreement that they have entered into…”

Justice Perell considered the implied duty of good faith in contract law in Rio Algom Limited v. Canada[iv] and he noted, “…while Canadian courts have been cautious about the scope of a doctrine of good faith in the performance of contracts, the doctrine is developing and it does have a role to play…” In studying the claim as it is framed in the amended Statement of Claim before me, at this stage, I must accept the facts as pleaded and determine whether the claim has any possibility of success.