Good Faith between Public and Private

Abstract

Canada’s common law of contract has seen years of theory, advocacy, and vaguer musings concretized in the form of a new organizing principle of good faith.This is established in the case of Bhasin v. Hrynew. The meaning of this organizing principle is now up for grabs. If good faith aims to regulate the content of contractual duties while at the same time being immanent in parties’ expectations, what could it possibly mean? How could good faith spring from the parties’ agreement and yet control it? In this article, I draw out the implications of this question by testing existing work on good faith in contract against the doctrinal data in Bhasin. It will turn out that previous understandings of good faith tend to take one of two forms, public and private, and neither quite works as an organizing principle that can help us understand relevant doctrine. But I suggest that a new understanding, a relational good faith, does. That is, relational in the sense of relational autonomy, not Macneil et al's relational theory of contract.

Good faith is just this: in contracting, parties must respect their counterparties as relational subjects, as simultaneously possessed of abstract personhood while being constituted by their position in structures of relations. It means recognizing the incompleteness of attempts to understand law through overly public or private lenses. Reasons for legal decisions must be reasons that party and court, businessperson and citizen, can hold as their own. Good faith is the recognition that there is something more than the private ordering paradigm going on in contracts, and that recognizing this can yet manifest a fuller respect for the private parties. It is the studious rejection of any stopping point in our collective search for the proper relationship between a person and their context.

Keywords: contract law, good faith, relational theory

JEL Classification: K00, K12